UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Month of June 2020

 

Commission File Number 001-31880

 

Yamana Gold Inc.

(Translation of registrant’s name into English)

 

Royal Bank Plaza, North Tower, 200 Bay Street, Suite 2200, Toronto, ON M5J 2J3

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

Form 20-F   o       Form 40-F x

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

 

 

 


 

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

YAMANA GOLD INC.

 

 

Date: June 1, 2020

By:

/s/ Sofia Tsakos

 

 

Sofia Tsakos

 

 

Senior Vice President, General Counsel and Corporate Secretary

 

2


 

EXHIBIT INDEX

 

Exhibits

 

Number

 

Description of Exhibit

 

 

 

99.1

 

Technical Report on the Jacobina Gold Mine

 

3


Exhibit 99.1

 

 

NI 43-101 TECHNICAL REPORT

 

JACOBINA GOLD MINE

 

BAHIA STATE, BRAZIL

 

 

Qualified Persons:

 

Eduardo de Souza Soares, MAusIMM CP (Min)

 

Renan Garcia Lopes, MAusIMM CP (Geo)

 

Henry Marsden, P.Geo.

 

Luis Vasquez, P.Eng.

 

Carlos Iturralde, P.Eng.

 

 

Royal Bank Plaza, North Tower
200 Bay Street, Suite 2200
Toronto, Ontario M5J 2J3

Effective Date: December 31, 2019
Signature Date: May 29, 2020

 


 

 

Yamana Gold Inc.
Royal Bank Plaza, North Tower
200 Bay Street, Suite 2200
Toronto, ON, Canada
M5J 2J3

NI 43-101 TECHNICAL REPORT
JACOBINA GOLD MINE
BAHIA STATE, BRAZIL

 

Effective Date:

December 31, 2019

 

 

Signature Date:

May 29, 2020

 

 

 

Authors:

 

[Signed]

 

 

 

[Signed]

 

 

Eduardo de Souza Soares
MAusIMM CP (Min)
Coordinator Technical Services,
Jacobina, Yamana Gold Inc.

 

 

 

Renan Garcia Lopes
MAusIMM CP (Geo)
Senior Geologist, Jacobina
Yamana Gold Inc.

 

 

 

 

 

 

 

 

 

[Signed]

 

 

 

[Signed]

 

 

Henry Marsden, P.Geo.
Senior Vice President, Exploration
Yamana Gold Inc.

 

 

 

Luis Vasquez, P.Eng.
Senior Environmental Consultant
and Hydrotechnical Engineer
SLR Consulting (Canada) Ltd.

 

 

 

 

 

 

 

 

 

[Signed]

 

 

 

[Signed]

 

 

Carlos Iturralde, P.Eng.
Director, Tailings, Health, Safety & Sustainable Development
Yamana Gold Inc.

 

Reviewer:

 

Sébastien Bernier, P.Geo.
Senior Director
Geology & Mineral Resources
Yamana Gold Inc.

 


 

TABLE OF CONTENTS

 

LIST OF ABBREVIATIONS

4

 

 

 

 

1

SUMMARY

1

 

 

 

 

 

1.1

PROPERTY DESCRIPTION

1

 

1.2

GEOLOGY AND MINERALIZATION

2

 

1.3

EXPLORATION STATUS

2

 

1.4

MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

3

 

1.5

MINING AND PROCESSING METHODS

5

 

1.6

ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT

7

 

1.7

PHASE 2 EXPANSION PRE-FEASIBILITY STUDY

8

 

1.8

CONCLUSIONS AND RECOMMENDATIONS

9

 

 

 

2

INTRODUCTION

14

 

 

 

 

 

2.1

SOURCES OF INFORMATION

15

 

 

 

3

RELIANCE ON OTHER EXPERTS

16

 

 

 

4

PROPERTY DESCRIPTION AND LOCATION

17

 

 

 

 

 

4.1

LOCATION

17

 

4.2

PROPERTY DESCRIPTION

18

 

4.3

LAND TENURE

18

 

 

4.3.1

Surface Rights

18

 

 

4.3.2

Mineral Rights

20

 

4.4

ENVIRONMENTAL CONSIDERATIONS

22

 

 

 

5

ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, AND PHYSIOGRAPHY

23

 

 

 

 

 

5.1

ACCESSIBILITY

23

 

5.2

CLIMATE

23

 

5.3

LOCAL RESOURCES

23

 

5.4

INFRASTRUCTURE

23

 

5.5

PHYSIOGRAPHY

24

 

5.6

VEGETATION

24

 

5.7

AVIAN FAUNA

25

 

 

 

6

HISTORY

27

 

 

 

 

 

6.1

PRIOR OWNERSHIP

27

 

6.2

HISTORICAL MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

28

 

6.3

PAST PRODUCTION

28

 

 

 

7

GEOLOGICAL SETTING AND MINERALIZATION

30

 

 

 

 

 

7.1

REGIONAL GEOLOGY

30

 

7.2

LOCAL AND PROPERTY GEOLOGY

31

 

i


 

 

 

7.2.1

Jacobina Group

32

 

 

7.2.2

Ultramafic Sills and Dykes

37

 

7.3

STRUCTURAL GEOLOGY

37

 

7.4

MINERALIZATION

38

 

 

7.4.1

Conglomerate-Hosted Placer Gold Mineralization

39

 

 

7.4.2

Post-Depositional Gold-Bearing Stockwork, Shear Zones and Extensional Quartz Veins

43

 

7.5

ALTERATION

43

 

 

 

8

DEPOSIT TYPES

44

 

 

 

9

EXPLORATION

45

 

 

 

 

 

9.1

EXPLORATION POTENTIAL

47

 

 

 

10

DRILLING

49

 

 

 

11

SAMPLE PREPARATION, ANALYSES, AND SECURITY

54

 

 

 

 

 

11.1

SAMPLE PREPARATION AND ANALYSIS

54

 

11.2

QUALITY ASSURANCE/ QUALITY CONTROL MEASURES

57

 

 

11.2.1

Standards

57

 

 

11.2.2

Blank Samples

57

 

 

11.2.3

Coarse Crush Duplicates

58

 

 

11.2.4

Field Duplicates

58

 

 

11.2.5

Inter-Laboratory Pulp Duplicates

58

 

11.3

SAMPLE SECURITY

58

 

 

 

12

DATA VERIFICATION

60

 

 

 

 

 

12.1

DATABASE VERIFICATION

60

 

12.2

QUALITY ASSURANCE/QUALITY CONTROL RESULTS

60

 

 

12.2.1

Standards

61

 

 

12.2.2

Blanks

66

 

 

12.2.3

Coarse Crush Duplicates

68

 

 

12.2.4

Field Duplicates

68

 

 

12.2.5

Inter-Laboratory Pulp Duplicates

69

 

 

 

13

MINERAL PROCESSING AND METALLURGICAL TESTING

71

 

 

 

 

 

13.1

PROCESSING PLANT

71

 

13.2

METALLURGICAL TESTING

71

 

 

13.2.1

Historical Test Work

71

 

 

 

14

MINERAL RESOURCE ESTIMATES

74

 

 

 

 

 

14.1

MINERAL RESOURCE SUMMARY

74

 

14.2

RESOURCE DATABASE AND VALIDATION

75

 

14.3

INTERPRETATION OF THE GEOLOGICAL STRUCTURES, LITHOLOGY, AND MINERALIZATION

76

 

14.4

TOPOGRAPHY AND EXCAVATION MODELS

77

 

ii


 

 

14.5

COMPOSITING METHODS

79

 

14.6

SAMPLE STATISTICS AND GRADE CAPPING

80

 

14.7

BULK DENSITY

83

 

14.8

VARIOGRAPHY

84

 

14.9

BLOCK MODEL CONSTRUCTION

86

 

14.10

BLOCK MODEL VALIDATION

87

 

14.11

CLASSIFICATION OF MINERAL RESOURCES

89

 

14.12

MINERAL RESOURCE STATEMENT

93

 

 

 

15

MINERAL RESERVE ESTIMATES

96

 

 

 

 

 

15.1

MINERAL RESERVE SUMMARY

96

 

15.2

CONVERSION METHODOLOGY

96

 

15.3

DILUTION AND EXTRACTION

98

 

15.4

CUT-OFF GRADE

98

 

15.5

RECONCILIATION

99

 

 

 

16

MINING METHODS

100

 

 

 

 

 

16.1

MINE DESIGN AND MINING METHOD

100

 

16.2

GEOMECHANICS

105

 

16.3

LIFE OF MINE PLAN

107

 

16.4

MINE EQUIPMENT

109

 

16.5

VENTILATION

109

 

16.6

COMPRESSED AIR

111

 

16.7

DEWATERING

111

 

16.8

POWER

113

 

16.9

COMMUNICATIONS

113

 

 

 

17

RECOVERY METHODS

114

 

 

 

 

 

17.1

PROCESSING PLANT

114

 

 

17.1.1

Crushing Circuit

114

 

 

17.1.2

Grinding Circuit

114

 

 

17.1.3

Thickening, Leaching, and Adsorption

114

 

 

17.1.4

Elution Circuit

115

 

 

17.1.5

Electrowinning Circuit

115

 

 

17.1.6

Processing Plant Optimization and Expansion

115

 

 

 

18

PROJECT INFRASTRUCTURE

118

 

 

 

 

 

18.1

POWER

120

 

18.2

TAILINGS DAM DESIGN AND CONSTRUCTION

120

 

 

18.2.1

Tailings Deposition and Reclaim Water System

122

 

 

 

19

MARKET STUDIES AND CONTRACTS

123

 

 

 

 

 

19.1

MARKETS

123

 

19.2

CONTRACTS

123

 

iii


 

20

ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT

124

 

 

 

 

 

20.1

PROJECT PERMITTING AND AUTHORIZATIONS

124

 

20.2

ENVIRONMENTAL MANAGEMENT

126

 

 

20.2.1

Environmental Management System

126

 

 

20.2.2

Tailings Management, Monitoring, and Water Management

127

 

 

20.2.3

Water Management

129

 

20.3

ENVIRONMENTAL MONITORING

131

 

20.4

ENVIRONMENTAL STATUS

133

 

20.5

COMMUNITY RELATIONS

134

 

 

20.5.1

General Context

134

 

 

20.5.2

PS1: Social and Environmental Assessment and Management Systems

136

 

 

20.5.3

PS2: Labour and Working Conditions

138

 

 

20.5.4

PS4: Community Health and Safety

139

 

 

20.5.5

PS5: Land Acquisition and Involuntary Resettlement

140

 

 

20.5.6

PS7: Indigenous Peoples

140

 

 

20.5.7

PS8: Cultural Heritage

140

 

20.6

MINE CLOSURE

141

 

20.7

SLR COMMENTS

144

 

 

 

21

CAPITAL AND OPERATING COSTS

147

 

 

 

 

 

21.1

CAPITAL COSTS

147

 

21.2

OPERATING COSTS

148

 

 

 

22

ECONOMIC ANALYSIS

150

 

 

 

23

ADJACENT PROPERTIES

151

 

 

 

24

OTHER RELEVANT DATA AND INFORMATION

152

 

 

 

 

 

24.1

PHASE 2 EXPANSION — UNDERGROUND MINING EQUIPMENT AND INFRASTRUCTURE

153

 

24.2

PHASE 2 EXPANSION — PROCESSING PLANT

156

 

 

24.2.1

Crushing Circuit

156

 

 

24.2.2

Grinding Circuit

157

 

 

24.2.3

Thickening of Grinding Product

157

 

 

24.2.4

Leaching Circuit

157

 

 

24.2.5

CIP Adsorption Circuit

157

 

 

24.2.6

Elution Circuit

157

 

 

24.2.7

Electrowinning Circuit

157

 

 

24.2.8

Tailings Disposal

158

 

 

24.2.9

Automation, Instrumentation, and Control

158

 

 

24.2.10

Architecture and Construction

158

 

24.3

PHASE 2 EXPANSION — POWER SUPPLY

158

 

24.4

PHASE 2 EXPANSION — LIFE OF MINE PLAN

158

 

24.5

PHASE 2 EXPANSION — PERMITTING

162

 

iv


 

 

24.6

PHASE 2 EXPANSION — CAPITAL COST ESTIMATE

163

 

 

24.6.1

Processing Plant Expansion Capital Cost

163

 

24.7

PHASE 2 EXPANSION — OPERATING COST ESTIMATE

166

 

24.8

PHASE 2 EXPANSION — ECONOMIC ANALYSIS

166

 

24.9

PHASE 2 EXPANSION — IMPLEMENTATION SCHEDULE

169

 

 

 

25

INTERPRETATION AND CONCLUSIONS

171

 

 

 

26

RECOMMENDATIONS

174

 

 

 

27

REFERENCES

177

 

 

 

28

CERTIFICATES OF QUALIFIED PERSONS

181

 

 

 

APPENDIX A — MINERAL TITLE

A

 

v


 

LIST OF FIGURES

 

Figure 4-1:

General location map

17

Figure 4-2:

Mining and exploration concessions

21

Figure 5-1:

Infrastructure and typical landscape

26

Figure 7-1:

Tectonic assemblage map

31

Figure 7-2:

Geology of project area

32

Figure 7-3:

Geology of the Jacobina Mine Complex

35

Figure 7-4:

Stratigraphic correlation between mining blocks

36

Figure 7-5:

Examples of post-mineralization faults and shear zones

38

Figure 7-6:

Generalized cross-section through the Morro do Vento Mine

40

Figure 7-7:

Photographs of conglomerate-hosted gold mineralization

42

Figure 9-1:

Location of geological mapping and sampling programs

46

Figure 9-2:

Jacobina longitudinal section showing down-plunge exploration potential

48

Figure 10-1:

Distribution of drilling, by mine, as of December 31, 2019 (top); Drilling by year (2010—2019) (bottom)

50

Figure 10-2:

Location of drill holes

51

Figure 12-1:

Assay results of standards analyzed at ALS and Jacobina laboratories

66

Figure 12-2:

Assay results of inserted blank samples at ALS and Jacobina laboratories

67

Figure 12-3:

Bias charts for coarse crushed duplicates analyzed at ALS and Jacobina laboratories

68

Figure 12-4:

Bias charts for field duplicates analyzed at ALS and Jacobina laboratories

69

Figure 12-5:

Bias charts of inter-laboratory check assay results

70

Figure 14-1:

Plan (top) and longitudinal view (bottom) of the mine infrastructure

78

Figure 14-2:

Example of excavation and depletion models

79

Figure 14-3:

Box and whisker plot of João Belo composite samples

80

Figure 14-4:

Graphical guides used for selection of capping values, João Belo Mine (lvlc reef)

81

Figure 14-5:

Summary of the density values for the João Belo Mine as of December 31, 2019

83

Figure 14-6:

Swath plots for lvlc Reef, João Belo Mine

89

Figure 14-7:

Long section of classified block models at Morro do Cuscuz (top) and Canavieiras South (bottom)

90

Figure 14-8:

Long section of classified block models at Serra do Córrego (top) and Canavieiras Central (bottom)

91

Figure 14-9:

Long section of classified block models at João Belo (top) and Morro do Vento (bottom)

92

Figure 16-1:

Schematic cross-section of sublevel stoping

101

Figure 16-2:

Mineral reserves — South Complex

102

Figure 16-3:

Mineral reserves — Central Complex

103

Figure 16-4:

Mineral reserves — North Complex

104

Figure 16-5:

Stability chart with dilution curves

106

Figure 16-6:

Phase 1 LOM gold production profile

107

Figure 16-7:

Schematic sectional view of ventilation circuit — Canavieiras South Mine

110

Figure 16-8:

Schematic drawing of dewatering system at João Belo Mine

112

Figure 17-1:

Current process flow sheet

116

Figure 17-2:

Phase 1 Optimization process flow sheet

117

Figure 18-1:

Site layout of mine infrastructure

119

 

vi


 

Figure 18-2:

Cross-section of TSF B2 dam at final elevation

121

Figure 24-1:

Phase 2 Expansion process flow sheet

155

Figure 24-2:

LOM production profile — Phase 2 Expansion PFS case

161

Figure 24-3:

LOM production profile — Phase 2 Extended Case

161

Figure 24-4:

Cumulative discounted cash flow at 5% discount rate

167

 

vii


 

LIST OF TABLES

 

Table 1-1:

Jacobina Mineral Resource Statement, December 31, 2019

3

Table 1-2:

Jacobina Mineral Reserve Statement, December 31, 2019

5

Table 4-1:

Jacobina — Rights of possession

19

Table 4-2:

Jacobina — Rights of ownership

20

Table 6-1:

Summary of gold production at the Jacobina mine, 1983 to 2019

29

Table 7-1:

Characteristics of gold mineralization at Jacobina

41

Table 10-1:

Summary of drilling history between 1970 and December 31, 2019

49

Table 10-2:

Historical distribution of drilling by mine as of December 31, 2019

49

Table 10-3:

Drilling procedures

53

Table 11-1:

List of sample preparation and analytical standard operating procedures

54

Table 12-1:

Summary of QA/QC results, January 1 to December 31, 2019

60

Table 12-2:

Performance of standards, ALS laboratory — exploration drilling

61

Table 12-3:

Performance of standards, ALS laboratory — infill drilling

62

Table 12-4:

Performance of standards, Jacobina laboratory — exploration drilling

63

Table 12-5:

Performance of standards, Jacobina laboratory — infill drilling

64

Table 12-6:

Performance of standards, Jacobina laboratory — underground channel samples

65

Table 13-1:

2018 Jacobina mineral processing plant production

72

Table 13-2:

2019 Jacobina mineral processing plant production

73

Table 14-1:

Jacobina Mineral Resource Statement, December 31, 2019

75

Table 14-2:

Summary of drilling and channel databases used for resource estimation

75

Table 14-3:

Summary of modelling extents

76

Table 14-4:

Number of mineralized wireframes (reefs) by model area

77

Table 14-5:

Summary of capping values by mineralized wireframe model

82

Table 14-6:

Block model bulk density values

84

Table 14-7:

Variogram parameters for the main reef of each mine

85

Table 14-8:

Generalized block model parameters

86

Table 14-9:

Summary of the general estimation search parameters

87

Table 14-10:

Statistical validation of the estimated block model (João Belo — mspc reef)

88

Table 14-11:

Summary of Jacobina mineral resources by mining block as of December 31, 2019

94

Table 15-1:

Jacobina Mineral Reserve Statement, December 31, 2019

96

Table 15-2:

Stope design parameters

98

Table 15-3:

Cut-off grades

98

Table 15-4:

2019 Reconciliation

99

Table 16-1:

Jacobina ground support standards

106

Table 16-2:

Life of mine plan — Phase 1 Optimization

108

Table 16-3:

List of current mobile mining equipment

109

Table 16-4:

Ventilation fans — Number of units

109

Table 16-5:

Compressed air

111

Table 20-1:

Summary of environmental operational licences

125

Table 20-2:

Summary of water permits

126

Table 20-3:

Social risk management element of Yamana’s 2016 HSEC Framework

136

Table 20-4:

Health and safety management element of Yamana’s 2016 HSEC Framework

138

 

viii


 

Table 20-5:

Summary of main closure activities

142

Table 20-6

Total estimated costs for mining reclamation and closure (from 2018 mine closure plan)

144

Table 21-1:

Life of mine capital costs

147

Table 21-2:

LOM Average unit operating costs

149

Table 24-1:

Mining equipment requirements

153

Table 24-2:

LOM plan — Phase 2 Expansion PFS Case

160

Table 24-3:

Phase 2 Expansion LOM Capital costs

163

Table 24-4:

Capital cost estimate by discipline

165

Table 24-5:

LOM average unit operating costs

166

Table 24-6:

Phase 2 LOM Summary

157

Table 24-7:

Phase 2 Expansion — Gold price sensitivity at BRL:USD exchange rate of 4.0:1

168

Table 24-8:

Phase 2 Expansion — Gold price sensitivity at BRL:USD exchange rate of 5.0:1

168

Table 24-9:

Project implementation schedule

170

 

ix


 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This report contains or incorporates by reference “forward-looking statements” and “forward-looking information” under applicable Canadian securities legislation within the meaning of the United States Private Securities Litigation Reform Act of 1995. Forward-looking information includes, but is not limited to: cash flow forecasts, projected capital, operating and exploration expenditures, targeted cost reductions, mine life and production rates, grades, infrastructure, capital, operating and sustaining costs, the future price of gold, potential mineralization and metal or mineral recoveries, estimates of mineral resources and mineral reserves and the realization of such mineral resources and mineral reserves, information pertaining to potential improvements to financial and operating performance and mine life at Jacobina (as defined herein) that may result from expansion projects or other initiatives, the timing and expected outcomes of the Phase 1 Optimization and the Phase 2 Expansion projects, maintenance and renewal of permits or mineral tenure, estimates of mine closure obligations, leverage ratios and information with respect to the Company’s (as defined herein) strategy, plans or future financial or operating performance. Forward-looking statements are characterized by words such as “plan,” “expect”, “budget”, “target”, “project”, “intend”, “believe”, “anticipate”, “estimate” and other similar words, or statements that certain events or conditions “may” or “will” occur, including the negative connotations of such terms. Forward-looking statements are statements that are not historical facts and are based on the opinions, assumptions and estimates of Qualified Persons considered reasonable at the date the statements are made, and are inherently subject to a variety of risks and uncertainties and other known and unknown factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include, but are not limited to: the impact of general domestic and foreign business; economic and political conditions; global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future conditions; fluctuating metal and commodity prices (such as gold, silver, diesel fuel, natural gas and electricity); currency exchange rates (such as the Brazilian real and the Canadian dollar versus the United States dollar); changes in interest rates; possible variations in ore grade or recovery rates; the speculative nature of mineral exploration and development; changes in mineral production performance, exploitation and exploration successes; diminishing quantities or grades of reserves; increased costs, delays, suspensions, and technical challenges associated with the construction of capital projects; operating or technical difficulties in connection with mining or development activities, including disruptions in the maintenance or provision of required infrastructure and information technology systems; damage to the Company’s or Jacobina’s reputation due to the actual or perceived occurrence of any number of events, including negative publicity with respect to the handling of environmental matters or dealings with community groups, whether true or not; risk of loss due to acts of war, terrorism, sabotage and civil disturbances; risks associated with infectious diseases, including COVID-19; risks associated with nature and climatic conditions; uncertainty regarding whether Jacobina will meet the Company’s capital allocation objectives; the impact of global liquidity and credit availability on the

 

i


 

timing of cash flows and the values of assets and liabilities based on projected future cash flows; the impact of inflation; fluctuations in the currency markets; changes in national and local government legislation, taxation, controls or regulations and/or changes in the administration of laws, policies and practices, expropriation or nationalization of property and political or economic developments in Brazil; failure to comply with environmental and health and safety laws and regulations; timing of receipt of, or failure to comply with, necessary permits and approvals; changes in project parameters as plans continue to be refined; changes in project development, construction, production and commissioning time frames; contests over title to properties or over access to water, power, and other required infrastructure; increased costs and physical risks including extreme weather events and resource shortages related to climate change; availability and increased costs associated with mining inputs and labor; the possibility of project cost overruns or unanticipated costs and expenses, potential impairment charges, higher prices for fuel, steel, power, labour, and other consumables contributing to higher costs; unexpected changes in mine life; final pricing for concentrate sales; unanticipated results of future studies; seasonality and unanticipated weather changes; costs and timing of the development of new deposits; success of exploration activities; risks related to relying on local advisors and consultants in foreign jurisdictions; unanticipated reclamation expenses; limitations on insurance coverage;  timing and possible outcome of pending and outstanding litigation and labour disputes; risks related to enforcing legal rights in foreign jurisdictions, vulnerability of information systems and risks related to global financial conditions. In addition, there are risks and hazards associated with the business of mineral exploration, development, and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding, failure of plant, equipment, or processes to operate as anticipated (and the risk of inadequate insurance, or inability to obtain insurance, to cover these risks), as well as those risk factors discussed or referred to herein and in the Company’s Annual Information Form filed with the securities regulatory authorities in all of the provinces and territories of Canada and available under the Company’s profile at www.sedar.com, and the Company’s Annual Report on Form 40-F filed with the United States Securities and Exchange Commission. Although the Company has attempted to identify important factors that could cause actual actions, events, or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events, or results not to be anticipated, estimated or intended.  There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The Company undertakes no obligation to update forward-looking statements if circumstances or management’s estimates, assumptions, or opinions should change, except as required by applicable law. The reader is cautioned not to place undue reliance on forward-looking statements. The forward-looking information contained herein is presented for the purpose of assisting investors in understanding the Company’s expected financial and operational performance and results as at and for the periods ended on the dates presented in the Company’s plans and objectives and may not be appropriate for other purposes.

 

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Cautionary Note to United States Investors Concerning Estimates of Mineral Reserves and Mineral Resources

 

This report has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ in certain material respects from the disclosure requirements promulgated by the Securities and Exchange Commission (the “SEC”). For example, the terms “Mineral Reserve”, “Proven Mineral Reserve”, “Probable Mineral Reserve”, “Mineral Resource”, “Measured Mineral Resource”, “Indicated Mineral Resource” and “Inferred Mineral Resource” are Canadian mining terms as defined in accordance with Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects and the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) - CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended. These definitions differ from the definitions in the disclosure requirements promulgated by the SEC. Accordingly, information contained in this report may not be comparable to similar information made public by U.S. companies reporting pursuant to SEC disclosure requirements.

 

Non-GAAP Measures

 

The Company has included certain non-GAAP financial measures and additional line items or subtotals, which the Company believes that, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. Non-GAAP financial measures do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The non-GAAP financial measures included in this report include: free cash flow, cash costs per gold-equivalent ounce sold, and all-in sustaining costs per gold-equivalent ounce sold. Please refer to section 11 of the Company’s current annual Management’s Discussion and Analysis, which is filed under the Company’s profile on SEDAR at www.sedar.com and which includes a detailed discussion of the usefulness of the non-GAAP measures. The Company believes that in addition to conventional measures prepared in accordance with IFRS, the Company and certain investors and analysts use this information to evaluate the Company’s performance. In particular, management uses these measures for internal valuation for the period and to assist with planning and forecasting of future operations.

 

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LIST OF ABBREVIATIONS

 

Units of measurement used in this report conform to the metric system. All currency in this report is listed in US dollars (US$) unless noted otherwise.

 

°

degrees

 

SMU

selective mining units

greater than

 

SOP

standard operating procedure

less than

 

t

metric tonne

%

percent

 

tpy

metric tonnes per year

a

annum

 

tpd

metric tonnes per calendar day

A

ampere

 

TSF

tailings storage facility

Ag

silver

 

USD, US$

United States dollar

ANM

National Mining Agency

 

V

volt

ARD

acid rock drainage

 

VSO

Vulcan Stope Optimizer

Au

gold

 

W

watt

BRL, R$

Brazilian real

 

yd3

cubic yard

°C

degree Celsius

 

y

year

cfm

cubic feet per minute

 

 

 

CIP

carbon-in-pulp

 

Jacobina Mining Blocks

cm

centimetre

 

 

 

d

day

 

JBN

João Belo

DCF

discounted cash flow

 

MCZ

Morro do Cuscuz

EPCM

engineering, procurement, construction management

 

MVT

Morro do Vento

g

gram

 

SCO

Serra do Córrego

g

peak ground acceleration

 

CAS

Canavieiras South

G

giga (billion)

 

CAC

Canavieiras Central

Ga

billion years ago

 

CAN

Canavieiras North

g/t

grams per tonne

 

 

 

ha

hectare

 

 

 

hp

horsepower

 

 

 

h

hour

 

 

 

HSEC

Health, safety, environment and community

 

 

 

Hz

hertz

 

 

 

IFRS

international financial reporting standards

 

 

JMC

Jacobina Mineração e Comércio S. A.

 

 

k

kilo (thousand)

 

 

kg

kilogram

 

 

km

kilometre

 

 

km2

square kilometre

 

 

km/h

kilometres per hour

 

 

kVA

kilovolt-amperes

 

 

kW

kilowatt

 

 

kWh

kilowatt-hour

 

 

IFC

International Finance Corporation

 

 

LOM

life of mine

 

 

L

litre

 

 

LOM

life of mine

 

 

m

metre

 

 

M

Mega, million

 

 

m2

square metre

 

 

m3

cubic metre

 

 

masl

metres above sea level

 

 

μg

microgram

 

 

Ma

million years ago

 

 

m3/h

cubic metres per hour

 

 

ML

metal leaching

 

 

μm

micrometre, micron

 

 

mm

millimetre

 

 

MW

megawatt

 

 

MWh

megawatt-hour

 

 

NSR

net smelter return

 

 

NPV

net present value

 

 

oz

Troy ounce (31.1035g)

 

 

PFS

pre-feasibility study

 

 

PS

performance standards

 

 

ppb

parts per billion

 

 

ppm

parts per million

 

 

QA/QC

quality assurance/quality control

 

 

RC

reverse circulation

 

 

ROM

run-of-mine

 

 

s

second

 

 

SD

standard deviation

 

 

SLS

sublevel longhole stoping

 

 

 

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1                                      SUMMARY

 

This report documents the Jacobina Mine (Jacobina), an underground gold mine located in the state of Bahia of northeastern Brazil. Yamana Gold Inc. (Yamana) holds a 100% interest in the property through its subsidiary, Jacobina Mineração e Comércio S. A. (JMC).

 

Yamana is a Canadian-based precious metals producer with significant gold and silver production- and development-stage properties, exploration properties, and land positions throughout the Americas, including Canada, Brazil, Chile, and Argentina. Yamana plans to continue to build on this base through expansion and optimization initiatives at existing operating mines, development of new mines, advancement of its exploration properties and, at times, by targeting other consolidation opportunities, with a primary focus on the Americas.

 

This NI 43-101 technical report prepared in accordance with National Instrument 43-101 — Standards of Disclosure for Mineral Projects (NI 43-101) documents the mineral resource and mineral reserve estimate of Jacobina as of December 31, 2019; it also summarizes the current mining operation at the Jacobina Gold Mine as of December 31, 2019; it summarizes the LOM plan and cost estimates for the Phase 1 Optimization scenario with a plant throughput of 6,500 tpd; and it summarizes the results of a pre-feasibility study (PFS), conducted by Ausenco Limited (Ausenco) with a signature date of March 31, 2020, that evaluated a mill expansion, referred to as the Phase 2 Expansion, that would increase throughput to 8,500 tpd, a 30% increase in annual gold production.

 

1.1                                        PROPERTY DESCRIPTION

 

The Jacobina Mine Complex is located approximately 340 km by road northwest of the city of Salvador. The Jacobina project area forms a long rectangle measuring 155 km in a north-south direction and 5 to 25 km in an east-west direction. The shape of the claim package reflects the underlying geology as the stratigraphy favourable for hosting gold mineralization trends north-south.

 

The core mine area measures roughly eight kilometers in length, extending from João Belo (JBN) in the south through Morro do Cuscuz (MCZ), Morro do Vento (MVT) and the Canavieiras Sector (CAV) (that comprises Canavieiras South (Sul) (CAS), Canavieiras Central (CAC), and Canavieiras North (Norte) (CAN)), at the north end. All sectors of the mine are connected by roads and underground development. The core mine and the extension to the south are covered by mining leases whereas the exploration potential to the north are covered by exploration concessions.

 

Yamana acquired Jacobina when it completed the purchase of Desert Sun Mining Corp. (Desert Sun) in April 2006. The mineral rights of the Jacobina property consist of approximately 5,954 ha of mining concessions, 71,045 ha of exploration permits, and one 650 ha mining claim; all of

 

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which are held by JMC. JMC has all required permits to continue carrying out the proposed mining operations on the Jacobina property.

 

JMC does not pay royalties, however, it does pay taxes to the federal mineral sector agency; these taxes, called Compensação Financeira pela Exploração de Recursos Minerais (CFEM) and also known as the Brazilian mining royalty, are set at a rate of 1.5%. JMC does not have any obligations in respect to back-in rights, payments, or other agreements or encumbrances.

 

1.2                                        GEOLOGY AND MINERALIZATION

 

The Serra de Jacobina Mountains have been mined for gold since the late 17th century. Numerous old workings from artisanal miners (garimpeiros) can be seen along a 15-km strike length, following the ridges of the Serra Do Ouro mountain chain. Since mining commenced at Jacobina in 1983, over 33 Mt of tonnes have been processed at an average grade of 2.19 g/t gold for a production of over 2.2 Moz of gold.

 

The gold mineralization at Jacobina is hosted almost entirely within quartz pebble conglomerates of the Serra do Córrego Formation, the lowermost sequence of the Proterozoic-age Jacobina Group. The gold-bearing reefs range from less than 1.5 m to 25 m in thickness and can be followed along strike for hundreds of metres, and in some cases for kilometres. Although they are quite homogeneous along their strike and dip extensions, the gold-bearing conglomerates differ from one another in stratigraphic position and pattern of gold distribution. The differences are likely due to variations in the sedimentary source regions, erosion and transportation mechanisms, and the nature of the depositional environments. Not all conglomerates of the Serra do Córrego Formation are gold-bearing.

 

1.3                                        EXPLORATION STATUS

 

Since acquiring Jacobina in 2006, Yamana has carried out regional mapping and sampling with the goal of identifying additional surface occurrences of mineralized conglomerates along the strike length of the Jacobina belt. The favourable gold-bearing stratigraphy at Jacobina has been traced along a strike length for approximately 150 km.

 

The significant exploration results at Jacobina were obtained by underground core drilling. Drilling activities since 2017 have been successful in defining the plunge of the higher-grade portions of mineralized zones and have led to the discovery of new mineralized zones. On the basis of these exploration successes and the production history at Jacobina, good potential exists in the proximity of the current mine infrastructure for the discovery of new mineralized zones and of the strike and dip extents of known mineralized horizons.

 

Analytical samples include both drill core and channel samples. The drill core samples are generated from exploration and infill drilling programs that are conducted on surface and underground; they are used for target generation and estimation of mineral resources and

 

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reserves. The sample preparation, sample security, and analytical procedures at Jacobina are adequate and consistent with industry standards. The verification of the sampling data by Yamana and external consultants, including the analytical quality control data produced by Yamana for samples submitted to various laboratories, suggests that the analytical results delivered by the laboratories are sufficiently reliable for the purpose of mineral resource and mineral reserve estimation.

 

1.4                                        MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

 

Preparation of the mineralized wireframe models used to estimate the block grades began with the preparation of a structural model that reflected the current understanding of the location and offsets of the many post-mineralization faults present in the mining areas. A series of lithological wireframe models was subsequently prepared to depict the overall location and distribution of the quartz-pebble conglomerate reefs and the interbedded massive quartzite beds. These lithological models were subsequently used to prepare wireframe models of the mineralized intervals. No minimum thickness was applied to the mineralized wireframes used to generate the grade estimation domains. The mineralized wireframes were created using a cut-off grade of 0.5 g/t gold. However, minimum thickness-reporting criteria for mineral resources was applied during the generation of conceptual mining shapes.

 

Jacobina mineral resources have been estimated in conformity with generally accepted standards set out in CIM Mineral Resource and Mineral Reserves Estimation Best Practices Guidelines (November 2019) and were classified according to CIM Definition Standards for Mineral Resources and Mineral Reserves (May 2014). Mineral resources are not mineral reserves and have not demonstrated economic viability. Underground mineral resources are estimated within conceptual underground mining shapes at a cut-off grade of 1.00 g/t gold, which corresponds to 75% of the break-even cut-off used to estimate the mineral reserves. A minimum mining width of 1.5 m is used to construct the conceptual mining shapes. Mineral resources are reported considering internal waste and dilution.

 

The Mineral Resource Statement of Jacobina as of December 31, 2019, exclusive of mineral reserves, is presented in Table 1-1.

 

Table 1-1: Jacobina Mineral Resource Statement, December 31, 2019

 

Category

 

Tonnage
(kt)

 

Gold Grade
(Au g/t)

 

Contained
Gold (koz)

 

Measured

 

27,705

 

2.26

 

2,014

 

Indicated

 

14,765

 

2.27

 

1,076

 

Total Measured + Indicated

 

42,470

 

2.26

 

3,090

 

Inferred

 

18,528

 

2.36

 

1,406

 

 

1.              Mineral resources have been estimated by the Jacobina Resources Geology Team under the supervision of Renan Garcia Lopes, Senior Geologist, Registered Chartered Professional Member of Australasian Institute of Mining and Metallurgy, MAusIMM CP(Geo) Number 328085,

 

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a full-time employee of JMC, and a qualified person as defined by National Instrument 43-101. The mineral resource estimate conforms to the CIM (2014) Standards.

 

2.              Mineral resources are reported exclusive of mineral reserves.

 

3.              Mineral resources are not mineral reserves and do not have demonstrated economic viability.

 

4.              Underground cut-off grade is 1.00 g/t Au, which corresponds to 75% of the cut-off used to estimate the mineral reserves.

 

5.              Minimum mining width of 1.5 m, considering internal waste and dilution

 

6.              All figures are rounded to reflect the relative accuracy of the estimate. Numbers may not add up due to rounding.

 

The methodology used at Jacobina to convert mineral resources to mineral reserves is summarized as follows:

 

·                  Verify geometries for the block model and resource wireframes.

 

·                  Confirm accurate block model depletion with current excavated development and stope solids up to the effective reporting date.

 

·                  Discard any resources within 30 m of the surface topography.

 

·                  Create automated stope shapes using MSO in Datamine using variable break-even cut-off grades by zone and stope dimensions of 10 × 10 m.

 

·                  Design stope polygons in Maptek Vulcan based on MSO stope shapes at section spacing of 5 to 10 m, depending on continuity of mineralization.

 

·                  Design the stope shapes in Maptek Vulcan based on the stope polygons and the stope design parameters, considering orebody geometry, mine layout, historical information, and geotechnical analysis.

 

·                  Design development shapes and cut development shapes from stope shapes.

 

·                  Evaluate all shapes against the block model and report ore tonnes and grade by classification. Exclude stope shapes and associated development below the cut-off grades.

 

·                  Exclude all stopes that contain mostly inferred mineral resources.

 

·                  Design capital and auxiliary development, including ramps, ventilation, materials handling, access, and infrastructure.

 

·                  Complete an economic analysis of each stope shape and exclude all stope shapes that are not cash-flow positive when considering associated development and infrastructure.

 

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·                  Complete a geotechnical analysis of each sector and make adjustments to the design where required.

 

·                  List stopes as “approved” or “not approved” based on cut-off grade, economic and geotechnical analyses prior to conversion to mineral reserves. Apply the mining extraction factor.

 

The Mineral Reserve Statement of Jacobina as of December 31, 2019, is presented in Table 1-2.

 

Table 1-2: Jacobina Mineral Reserve Statement, December 31, 2019

 

 

 

 

Proven

 

 

Probable

 

 

Total Reserves

 

 

 

 

Tonnes

 

Gold
Grade

 

Contained
Gold

 

 

Tonnes

 

Gold
Grade

 

Contained
Gold

 

 

Tonnes

 

Gold
Grade

 

Contained
Gold

 

Zone

 

 

kt

 

g/t Au

 

koz

 

 

kt

 

g/t Au

 

koz

 

 

kt

 

g/t Au

 

koz

 

JBN

 

 

6,591

 

1.93

 

408

 

 

3,388

 

1.87

 

203

 

 

9,979

 

1.91

 

612

 

MVT

 

 

2,268

 

2.11

 

154

 

 

5,674

 

2.44

 

445

 

 

7,942

 

2.35

 

599

 

MCZ

 

 

1,449

 

1.93

 

90

 

 

87

 

1.96

 

5

 

 

1,536

 

1.93

 

95

 

SCO

 

 

673

 

1.93

 

42

 

 

1,356

 

2.1

 

92

 

 

2,030

 

2.04

 

133

 

CAS

 

 

5,761

 

2.33

 

432

 

 

1,117

 

2.12

 

76

 

 

6,878

 

2.3

 

508

 

CAC

 

 

2,640

 

3.39

 

288

 

 

1,372

 

2.56

 

113

 

 

4,012

 

3.1

 

400

 

CAN

 

 

1,338

 

2.59

 

111

 

 

461

 

2.29

 

34

 

 

1,799

 

2.51

 

145

 

Total

 

 

20,720

 

2.29

 

1,525

 

 

13,456

 

2.24

 

968

 

 

34,176

 

2.27

 

2,493

 

 

1.              Mineral reserves have been estimated by the Jacobina long-term mine planning team under the supervision of Eduardo de Souza Soares, Registered Chartered Professional Member of Australasian Institute of Mining and Metallurgy, MAusIMM CP(Min) Number 330431, a full-time employee of JMC, and a qualified person as defined by National Instrument 43-101. The mineral reserve estimate conforms to the CIM (2014) Standards.

 

2.              Mineral reserves are reported by zone at variable cut-off grades ranging from of 1.12 g/t to 1.30 g/t gold. Lower-grade stopes were subsequently excluded from the life of mine plan and mineral reserves inventory to optimize the cash flow model. The cut-off grade is based on metal price assumptions of US$1,250/oz for gold, a gold processing recovery assumption of 96%, and operating cost assumptions ranging from US$42.60 to 49.52/t processed.

 

3.              Mineral reserves are stated at a mill feed reference point and account for minimum mining widths, diluting material, and mining losses.

 

4.              All stope shapes contain a majority of measured and indicated mineral resources and may include minority portions of inferred resources and unclassified material with modelled gold grades.

 

5.              Numbers may not add up due to rounding.

 

1.5                                        MINING AND PROCESSING METHODS

 

Jacobina utilizes the sublevel longhole stoping (SLS) method without backfill to achieve an average production rate of approximately 6,500 tpd from the ramp-accessed underground

 

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mines; these include João Belo, Canavieiras, Serra do Córrego, Morro do Cuscuz, and Morro do Vento.

 

Yamana is currently reviewing alternative mining methods and testing the suitability of the Jacobina tailings for paste fill or hydraulic fill applications. The results will be considered in a conceptual study that will evaluate the potential for constructing a fill plant at Jacobina. The use of cemented rock fill is also being evaluated. Alternative mining methods and the use of backfill is likely to increase mining extraction and has the potential to increase conversion of measured and indicated mineral resources to mineral reserves.

 

The major assets and facilities associated with Jacobina are: the mining and processing infrastructure, including office buildings, shops, and equipment; a conventional processing plant which produces gold doré and is equipped with crushers, ball mills, leach tanks and carbon-in-pulp (CIP) tanks; and a TSF with a final design capacity for the life of mine (LOM).

 

Jacobina Mine is connected to the National Electric Grid through a 138 kV transmission line connected to the Jacobina II electric substation in the City of Jacobina.

 

The tailings produced at the Jacobina mill are presently stored in a fully lined tailings storage facility, TSF B2, located 2.5 km north of the mineral processing plant. TSF B2 consists of a cyclone sand dam built following a downstream construction method. TSF B1 is a legacy tailings facility that has not been in operation since 2012.

 

The Jacobina mineral processing plant uses conventional gold processing methodologies to treat run-of-mine (ROM) material from the underground mines. Comminution comprises three stages of crushing followed by wet grinding. Within the grinding circuit, gravity concentration of gold is performed on a bleed stream of classification cyclone underflow. Rejects from the gravity circuit are returned to the grinding circuit. The cyclone overflow is sent to leaching in a conventional cyanide leaching process, and gold extraction from the leach solution is performed by carbon adsorption in the CIP tanks. Gold is stripped in an elution circuit and final gold recovery is performed in an electrowinning circuit. The sludge and solids from electrowinning are dried and smelted in an induction furnace to produce doré bars. The overall gold recovery in 2019 was 96.7%.

 

The Phase 1 life of mine (LOM) plan, including optimization of the processing plant to stabilize throughput at a sustainable 6,500 tpd (Phase 1 Optimization) due for completion in mid-2020, has been developed based on the mineral reserves inventory of Jacobina as of December 31, 2019, resulting in a mine life of 14.5 years.

 

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1.6                                        ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT

 

No environmental issues were identified from the documentation available for review that could materially impact the ability to extract the mineral resources and mineral reserves. Jacobina has the operational licences required for operation according to the national legislation. The approved licences address the authority’s requirements for mining extraction and operation activities. For expired licences in the process of being renewed, they remain valid until the revalidation process is completed by Instituto do Meio Ambiente e Recursos Hídricos (INEMA), the environmental agency for the state of Bahia. In compliance with conditions established in the operating licences, annual environmental assurance technical reports are submitted to the authorities.

 

An environmental monitoring program is in place at Jacobina for weather, surface water quality, groundwater quality, air quality and emissions, and ambient noise. Monitoring of flora and fauna was initiated in the first quarter of 2020.

 

Acid rock drainage (ARD) and metal leaching (ML) associated with TSF B1 and the João Belo stockpile (both inactive facilities), are managed through ponds and groundwater interceptor wells located downstream of the facilities. Water quality is monitored by Yamana at various locations downstream. Yamana is planning to install additional groundwater monitoring wells in the TSF areas. TSF B1 is being rehabilitated.

 

The water management system implemented at Jacobina appears to be sound and follows common practices applicable for the protection of the environment.

 

The ore processing system was designed to maximize the recirculation of process water and minimize the requirement for freshwater. The mine water is pumped back to the underground operations. The water collected in the active TSF B2 is recirculated to the process plant. Freshwater required for ore processing is supplied from a reservoir built in the Cuia River. There is no discharge of industrial water to the environment. The site wide water balance mitigates the risk to water supply due to drought as well as the risk of excess water to the operation.

 

Yamana has implemented an integrated management system covering health, safety, environment, and community through internationally accredited systems.

 

A conceptual mine closure plan was developed in 2018 for the mine components that includes a closure cost estimate. The latest version was completed in December 2018. With the potential for impacts to water from ARD/ML, and an existing sulphate/metals plume collection system, there could be long-term water management and treatment requirements post-closure. Long- term closure costs could potentially extend several years beyond closure.

 

No known social issues were identified from the documentation available for review. At present, Yamana’s operations at Jacobina are a positive contribution to sustainability and community

 

7


 

well-being. Jacobina has demonstrated a commitment to employee health, safety, and well-being; community programs; and ongoing outreach and data collection to support issues management and mitigation. Yamana has established and continues to implement its various policies, procedures, and practices in a manner broadly consistent with relevant IFC Performance Standards.

 

1.7                                        PHASE 2 EXPANSION PRE-FEASIBILITY STUDY

 

Yamana commissioned Ausenco to conduct a pre-feasibility study (PFS) of the proposed Phase 2 Expansion. This study, dated March 31, 2020, considered an expansion scenario that would increase the processing plant’s throughput capacity from 6,500 tpd to 8,500 tpd.

 

In 2019, Jacobina began optimizing the processing plant to stabilize throughput at a target rate of 6,500 tpd. Yamana refers to this optimization as Phase 1 Optimization. The first step of the optimization was the installation of an Advanced Process Control system in early 2019 to increase the level of plant automation. Other components of the optimization include additional gravity concentrators, a new induction kiln, replacement of screens, and new carbon-in-pulp (CIP) tanks. The Phase 1 Optimization project is on track for completion in mid-2020.

 

Jacobina achieved the Phase 1 Optimization throughput objective of 6,500 tpd in the first quarter of 2020, a full quarter ahead of schedule and without the benefits expected from the installation of all the plant modifications. Yamana continues to evaluate the actual Phase 1 performance and pursue further debottlenecking initiatives to determine the sustainable throughput level in excess of 6,500 tpd that the mill can achieve without additional investment. JMC is already permitted for throughput of up to 7,500 tpd.

 

Following up on Phase 1 Optimization, Yamana is studying the increase in throughput to 8,500 tpd; this is referred to as the Phase 2 Expansion. The throughput increase is expected to be achieved through the installation of an additional grinding line and incremental upgrades to the crushing and gravity circuits. If implemented, the Phase 2 Expansion is expected to increase annual gold production by 31%, reduce costs, and generate significant cash flow and attractive returns. The total capital cost of the Phase 2 Expansion is estimated at US$57 M, of which US$35 M is assigned for the processing plant, US$14 M for underground mining, and US$8 M for infrastructure.

 

The Phase 2 Expansion LOM (or PFS case) is based on the mineral reserves with an effective date of December 31, 2019. The PFS case LOM plan considers a mine life of 11.5 years, starting with a plant feed rate of 6,500 tpd for 2020 and 2021, ramping up production in 2022, to reach the average plant feed rate of 8,500 tpd by 2023. Plant throughput will be maintained at 8,500 tpd until 2030 and will decrease in 2031. The LOM gold production profile of the PFS case increases from a target Phase 1 Optimization running rate of 175 koz per year to approximately 230 koz per year.

 

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For internal planning purposes, an extended mine plan (Extended Case) has been developed that considers the addition of 9.5 Mt of plant feed with an average grade of 2.40 g/t gold, assuming the successful conversion of mineral resources into reserves. This would increase the mine life of the Phase 2 Expansion scenario from 11.5 years to 14.5 years.

 

Detailed engineering for the Phase 2 Expansion is currently scheduled to commence soon after commissioning of the Phase 1 Optimization in mid-2020. This would allow engineering and construction to be completed by early 2023.

 

Capital costs associated with the Phase 2 Expansion would not commence until 2021. These timelines are dependent on completion of the Phase 2 Expansion feasibility study by mid-2021. The feasibility study will look to further refine and optimize operating costs and also take into account the actual realized potential under the Phase 1 Optimization to determine the true potential of the Phase 2 Expansion. Yamana may choose to normalize operations under the Phase 1 Optimization for a period of time in order to determine the true realizable throughput for this phase before proceeding with the Phase 2 Expansion.

 

JMC has applied for permitting and expects the permits to be issued by late 2021, within the timeframes currently assumed for implementation of the Phase 2 Expansion. The permit application is for higher throughput than what is contemplated in the Phase 2 Expansion; this to ensure future flexibility.

 

1.8                                        CONCLUSIONS AND RECOMMENDATIONS

 

More than 2.2 Moz of gold have been produced from Jacobina since modern mining commenced in 1983. Annual gold production has increased year-after-year from 74 koz in 2013 to more than 159 koz in 2019, through increases in plant throughput, gold feed grade, and metallurgical recovery.

 

Drilling activities in previous years have been successful in defining the plunge of the higher-grade portions of the mineralized zones and have led to the discovery of new mineralized zones, such as João Belo Sul and the extension of mineralization in the East Block. On the basis of these exploration successes and the production history at Jacobina, good potential exists in the proximity of the current mine infrastructure for discovering new mineralized zones and/or the strike and dip extents of the known mineralized horizons.

 

In terms of the regional exploration potential, the favourable stratigraphy hosting the gold mineralization at Jacobina has been traced along a strike length of approximately 150 km. Exploration programs have discovered many gold occurrences along this favourable stratigraphy, including the Jacobina Norte project where gold mineralization has been discovered along a continuous 15 km-long trend. As of the end of December 2019, 7,067 drill holes were drilled in the Jacobina project area, for a total of 868,000 metres. Almost all of this

 

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drilling has been within the 11 km-long mining district, with the majority of the 88,000 hectares of exploration concessions still yet to be drilled.

 

Jacobina mineral resources and mineral reserves have been estimated in conformity with generally accepted CIM Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines (November 2019) and are reported in accordance with CIM (2014) Standards. The total proven and probable mineral reserve at Jacobina as of December 31, 2019, is 34.2 Mt averaging 2.27 g/t gold, for approximately 2.5 Moz of contained gold. In addition, measured and indicated mineral resources total 42.5 Mt grading 2.26 g/t gold (3.1 Moz gold) and inferred mineral resources of 18.5 Mt grading 2.36 g/t gold (1.4 Moz gold).

 

In 2019, Jacobina began optimizing the processing plant to stabilize throughput at a target rate of 6,500 tpd, referred to as the Phase 1 Optimization, which is on track for completion in mid-2020. Jacobina achieved the Phase 1 Optimization objective of 6,500 tpd in the first quarter of 2020, a full quarter ahead of schedule and without the benefits expected from the installation of all the plant modifications. Yamana continues to evaluate the actual performance of the Phase 1 Optimization and pursue further debottlenecking initiatives to determine the sustainable throughput level in excess of 6,500 tpd that the mill can achieve without additional investment.

 

Following up on the Phase 1 Optimization, Jacobina is studying the increase in throughput to 8,500 tpd, referred to as the Phase 2 Expansion. Yamana completed a pre-feasibility study for the Phase 2 Expansion in the first quarter of 2020 and will continue with a feasibility study, scheduled for completion in mid-2021.

 

Three LOM plan scenarios have been developed. In all scenarios, mining and processing of lower-grade supplementary mineral reserves is deferred until late in the mine life where possible, allowing feed grades of approximately 2.4 g/t gold to be maintained. The Phase 1 Optimization LOM plan assumes a plant throughput rate of 6,500 tpd and is based on mineral reserves as of December 31, 2019. In this scenario, the mine life is 14.5 years, with gold production of 175,000 oz per year at a gold feed grade of 2.4 g/t, and a gold metallurgical recovery of 96.5%.

 

The second scenario, the Phase 2 Expansion PFS case, is based on the same mineral reserves as the Phase 1 case, but includes the Phase 2 Expansion with plant throughput ramping up to 8,500 tpd by 2023. With the higher throughput rate, mine life is reduced to 11.5 years and gold production increases to 230,000 oz per year. The third scenario, referred to as the Phase 2 Expansion Extended Case and that Yamana uses as a base case for internal planning purposes, is the same as the Phase 2 PFS case, but considers an additional 9.5 Mt of plant feed at an average grade of 2.4 g/t gold based on the expected conversion of current mineral resources to mineral reserves through infill drilling. Gold production remains at 230,000 oz per year and mine life is extended to 14.5 years. Based on the impressive track record of discovery and successful conversion of mineral resources to mineral reserves at Jacobina, Yamana is confident that, based on required infill drilling, the future conversion of mineral resources to

 

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mineral reserves will continue to show positive results. Furthermore, the favourable geological environment, both near mine and regionally, provides exceptional mineral potential that may eventually result in extending the mine life beyond the Extended Case

 

The capital and operating cost estimates for the Phase 1 Optimization LOM plan are based on mine budget data and operating experience, and are appropriate for the known mining methods and production schedule. Capital cost estimates include appropriate sustaining estimates. Under the assumptions in this technical report, Jacobina has positive project economics until the end of mine life, which supports the mineral reserve estimate. Capital and operating cost estimates for the Phase 2 Expansion scenarios were revised as part of the Phase 2 Expansion pre-feasibility study. Total Phase 2 Expansion project capital costs are estimated at US$57 M, of which $35 M is dedicated to the processing plant, $14M to underground mining, and $8 M to infrastructure. The project’s capital cost is expected to be invested incrementally and would allow the project to be funded by Jacobina’s cash flow. LOM average unit operating costs are estimated to decrease from US$41.04/t in the Phase 1 Optimization case to $37.50/t in the Phase 2 Expansion PFS case, due to improved efficiency and the distribution of fixed costs over a greater quantity of tonnes per year.

 

No environmental issues were identified from the documentation available for review that could materially impact the ability to extract the mineral resources and mineral reserves. Jacobina has all the operational licences required for operation according to the national legislation. The approved licences address the authority’s requirements for mining extraction and operation activities. For the Phase 2 Expansion, Yamana has applied for permitting and expects the permits to be issued by late 2021, within the timeframes currently assumed for implementation of Phase 2. The permit application is for higher throughput than what is contemplated in Phase 2 to ensure future flexibility. JMC is already permitted for throughput of up to 7,500 tpd.

 

No social issues were identified from the documentation available for review. At present, Yamana’s operations at Jacobina are a positive contribution to sustainability and community well-being. Jacobina has demonstrated a commitment to employee health, safety, and well-being; community programs; and ongoing outreach and data collection to support issues management and mitigation. Yamana has established and continues to implement its various policies, procedures, and practices in a manner broadly consistent with relevant IFC Performance Standards.

 

The results of this technical report are subject to variations in operational conditions including, but not limited to the following:

 

·                  Assumptions related to commodity and foreign exchange (in particular, the relative movement of gold and the Brazilian real/US dollar exchange rate)

 

·                  Unanticipated inflation of capital or operating costs

 

·                  Significant changes in equipment productivities

 

·                  Geological continuity of the mineralized structures

 

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·                  Geotechnical assumptions in pit and underground designs

 

·                  Ore dilution or loss

 

·                  Throughput and recovery rate assumptions

 

·                  Changes in political and regulatory requirements that may affect the operation or future closure plans

 

·                  Changes in closure plan costs

 

·                  Availability of financing and changes in modelled taxes

 

In the opinion of the qualified persons, there are no reasonably foreseen inputs from risks and uncertainties identified in the technical report that could affect the project’s continued economic viability.

 

Based on success in extending known mineral resources, Yamana should continue exploration at the mining operations. Due to the quantity of material in the mineral reserve category and its impact on mine life, Yamana’s focus is to continue infill drilling programs in support of converting mineral resources to mineral reserves. An additional focus will be to carry out exploration programs in the vicinities of the current mines to search for the strike and depth extensions of known mineralization.

 

Based on processing plant performance in the first quarter of 2020, in which the processing plant throughput exceeded the Phase 1 Optimization target of 6,500 tpd, without the inclusion of the benefits expected from the installation of all the plant modifications, Yamana should continue to evaluate the Phase 1 Optimization actual performance and pursue further debottlenecking initiatives to determine the sustainable throughput level in excess of 6,500 tpd that the mill can achieve without additional investment.

 

Based on the positive results of the Phase 2 Expansion pre-feasibility study, Yamana should continue to advance the level of engineering for the Phase 2 Expansion and proceed to feasibility study. The feasibility study should look to further improve operating costs and also take into account the actual realized potential under the Phase 1 Optimization to determine the true potential of Phase 2 Expansion. In parallel to the Phase 2 Expansion feasibility study, Yamana should continue the application of permits for the increased throughput capacity.

 

Yamana should continue to evaluate the suitability of alternative mining methods and tailings as paste or hydraulic backfill, in addition to the use of multiple backfill types to optimize mining extraction. Yamana has initiated a separate study outside the Phase 2 Expansion PFS to evaluate the installation of a backfill plant to allow up to 2,000 tpd of tailings to be deposited in underground voids. Preliminary results indicate that the project has the potential to reduce the environmental footprint, extend the life of the existing tailing storage facility, and improve mining recovery, resulting in an increased conversion of mineral resources to mineral reserves.

 

Regarding environmental and social management, SLR recommends the following:

 

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·                  Conduct geochemical sampling and characterization of waste rock before developing a new waste rock stockpile.

 

·                  Maintain a robust water quality monitoring program to verify compliance with applicable environmental standards and evaluate the appropriateness of the water management strategies that are in place.

 

·                  Continue to implement the environmental monitoring program, which monitors and manages potential environmental impacts resulting from the mine operations, to inform future permit applications and mine closure plan updates.

 

·                  Consider the implementation of a noise- and vibrations-monitoring program, consistent with the integrated 2016 HSEC Framework.

 

·                  Consider establishing an energy and emissions strategy/plan to determine, on a defined frequency, sources of energy consumption and associated greenhouse gas (GHG) emissions, consistent with the integrated 2016 HSEC Framework.

 

·                  The existing sulphate/metals plume originating from the decommissioned TSF B1 may potentially cause ongoing effects on water. This could result in long-term closure costs extending beyond the five-year post-closure treatment period that is currently outlined in the conceptual 2018 mine closure plan. It is recommended that the closure cost estimate be reviewed as the closure plan and designs for both TSF facilities are developed in more detail. Costs for long-term monitoring and maintenance of dams should also be reviewed.

 

·                  Considering that, historically, mine site closures have the potential to result in significant economic impacts to a community, a detailed social management plan should be developed to mitigate the economic and social effects of mine closure; this plan would include ongoing consultation, training, and planning.

 

·                  Incorporate a strategy for closure of the inactive open pit into the mine closure plan.

 

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2                                      INTRODUCTION

 

The Jacobina Mine (Jacobina) is an underground gold mine located in the state of Bahia of northeastern Brazil, approximately 340 km by road northwest of the city of Salvador. Yamana Gold Inc. (Yamana) holds a 100% interest in the property through its subsidiary, Jacobina Mineração e Comércio S. A. (JMC).

 

Yamana is a Canadian-based precious metals producer with significant gold and silver production- and development-stage properties, exploration properties, and land positions throughout the Americas, including Canada, Brazil, Chile, and Argentina. Yamana plans to continue to build on this base through expansion and optimization initiatives at existing operating mines, development of new mines, advancement of its exploration properties and, at times, by targeting other consolidation opportunities, with a primary focus on the Americas.

 

Yamana acquired Jacobina when it completed the purchase of Desert Sun Mining Corp. (Desert Sun) in April 2006.

 

Yamana’s other operations include:

 

·                  100% ownership of the El Peñón underground and open-pit gold-silver mine near Antofagasta in northern Chile

 

·                  50% ownership in the Canadian Malartic open-pit gold mine located in Malartic, Québec, Canada

 

·                  100% ownership in the Cerro Moro underground and open-pit gold-silver mine located in Santa Cruz province, Argentina

 

·                  100% ownership of the Minera Florida underground gold-silver mine located south of Santiago, Chile

 

This technical report was prepared in accordance with National Instrument 43-101 — Standards of Disclosure for Mineral Projects (NI 43-101); it documents the mineral resource and mineral reserve estimates for Jacobina as of December 31, 2019; it also summarizes the current mining operation at the Jacobina Gold Mine as of December 31, 2019; it summarizes the LOM plan and cost estimates for the Phase 1 Optimization scenario with a plant throughput of 6,500 tpd; and it summarizes the results of a pre-feasibility study (PFS), conducted by Ausenco Limited (Ausenco) with a signature date of March 31, 2020, that evaluated a mill expansion, referred to as the Phase 2 Expansion, that would increase throughput to 8,500 tpd, a 30% increase in annual gold production. Results of the Phase 2 expansion study are described in Section 24 of this technical report.

 

This technical report was prepared by Yamana following the guidelines of NI 43-101 and Form 43-101F1. The mineral resource and mineral reserve estimates reported herein were prepared

 

14


 

in conformity with generally accepted standards set out in the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Mineral Resource and Mineral Reserves Estimation Best Practices Guidelines (November 2019) and were classified according to CIM Definition Standards for Mineral Resources and Mineral Reserves (CIM (2014) Standards).

 

2.1                                        SOURCES OF INFORMATION

 

The qualified persons for this technical report are Eduardo de Souza Soares, MAusIMM CP (Min); Renan Garcia Lopes, MAusIMM CP (Geo); Henry Marsden, P.Geo.; Carlos Iturralde, P.Eng. (all full-time employees of Yamana); and Luis Vasquez, P.Eng., of SLR Consulting (Canada) Ltd. (SLR).

 

Mr. de Souza Soares is the Coordinator Technical Services of the Jacobina mine. He was last at the mine between May 10 and 21, 2020. Mr. Garcia Lopes is a senior geologist for Yamana, also assigned to the Jacobina mine. He was last at the mine on March 18, 2020. Mr. Marsden, Senior Vice President, Exploration, for Yamana visited the project on six occasions including most recently on September 12 to 14, 2019. Mr. Iturralde, Director, Tailings, Health, Safety & Sustainable Development at Yamana, and Mr. Vazquez, Senior Environmental Consultant and Hydrotechnical Engineer at SLR, have not visited the project due to travel restrictions related to the global COVID-19 pandemic.

 

Eduardo de Souza Soares is responsible for Sections 13, 15 to 19 (excluding sub-section 18.2), 21 to 22, and 24; he also shares responsibility for related disclosure in Sections 1, 25, 26, and 27 of the technical report. Renan Garcia Lopes is responsible for Section 11, 12, and 14, and shares responsibility for related disclosure in Sections 1, 25, 26, and 27 of the technical report. Henry Marsden is responsible for Sections 2 to 10, 23, and shares responsibility for related disclosure in Sections 1, 25, 26, and 27 of the technical report. Luis Vasquez is responsible for Section 20 (excluding sub-section 20.2.2), and shares responsibility for related disclosure in Sections 1, 25, 26, and 27 of the technical report. Carlos Iturralde is responsible for Sections 18.2 and 20.2.2, and shares responsibility for related disclosure in Sections 1, 25, 26, and 27 of the technical report.

 

In preparation of this technical report, the qualified persons reviewed technical documents and reports on Jacobina supplied by on-site personnel. The documentation reviewed, and other sources of information, are listed at the end of this technical report in Section 27-References.

 

The most recent technical report on Jacobina was compiled by RPA Inc. (RPA) with an effective date of June 30, 2019 and a signature date of September 30, 2019 (RPA, 2019). The 2019 RPA report served as the foundation for this current technical report which updates the information as of an effective date of December 31, 2019. This technical report also includes the results of a pre-feasibility study (PFS) conducted by Ausenco with a signature date of March 31, 2020.

 

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3                                      RELIANCE ON OTHER EXPERTS

 

The information, conclusions, opinions, and estimates contained herein in this technical report are based on the following parameters:

 

·                  Information available to Yamana at the time of preparation of this technical report

 

·                  Assumptions, conditions, and qualifications as set forth in this technical report

 

The Brazilian government department responsible for mining lands, Agência Nacional de Mineração (ANM), maintains an internet-based system for accessing information on exploration concessions granted in Brazil. Yamana has a computerized claim management system that monitors this site regularly and updates claim data as required. The qualified persons have not performed an independent verification of the land title and tenure information, as summarized in Section 4 of this technical report, nor have they verified the legality of any underlying agreement(s) that may exist concerning the permits or other agreement(s) between third parties, as summarized in Section 4 of this technical report. For this topic, the qualified persons of this report have relied on information provided by the legal department of Yamana.

 

The qualified persons have relied on various Yamana departments for guidance on applicable taxes, royalties, and other government levies or interests, applicable to revenue or income from the Jacobina mine.

 

Except for the purposes legislated under applicable securities laws, any use of this technical report by any third party is at that party’s sole risk.

 

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4                                      PROPERTY DESCRIPTION AND LOCATION

 

4.1                                        LOCATION

 

The Jacobina Mine Complex, as shown in Figure 4-1, is located in the state of Bahia in northeastern Brazil (11°15’ S and 40°31’ W), approximately 340 km by road northwest of the city of Salvador. Salvador is the state capital of Bahia and has a population of approximately 2.9 million inhabitants.

 

The Jacobina project area forms a long rectangle measuring 155 km in a north-south direction and 5 to 25 km in an east-west direction. The shape of the claim package reflects the underlying geology as the stratigraphy favourable for hosting gold mineralization trends north-south.

Figure 4-1: General location map

 

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4.2                                        PROPERTY DESCRIPTION

 

The Jacobina property covers the core mine area as well as the on-strike exploration potential in the remainder of the Jacobina basin. The core mine area measures roughly eight kilometers in length, extending from João Belo (JBN) in the south through Morro do Cuscuz (MCZ), Morro do Vento (MVT) and the Canavieiras Sector (CAV) (which comprises Canavieiras South (Sul) (CAS), Canavieiras Central (CAC), and Canavieiras North (Norte) (CAN)), at the north end. All sectors of the mine are connected by roads and underground development. The core mine and the extension to the south are covered by mining leases while the exploration potential to the north are covered by exploration concessions.

 

4.3                                        LAND TENURE

 

4.3.1                                             SURFACE RIGHTS

 

Two general types of surface rights exist on the project: (1) rights of ownership and (2) rights of possession. Rights of ownership allow the title holder to occupy and sell the land while rights of possession allow occupation and use but are non-transferable and can not be sold. JMC holds all of the surface rights required for the development of its activities. There are no restrictions to surface rights in any of the areas encompassed by the project.

 

JMC holds rights of possession on 25 areas (Table 4-1) and 15 property titles (surface rights, rights of ownership) (Table 4-2), in Itapicurú, District of Jacobina, Bahia State, encompassing the entire project area.

 

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Table 4-1: Jacobina — Rights of possession

 

Vendor

 

Area (ha)

 

Location

 

Date

André Santos da Silva

 

0.155

 

Itapicurú

 

September 2007

Augusto Barbosa da Silva

 

0.034

 

Itapicurú

 

August 2007

Augusto Barbosa da Silva

 

0.553

 

Itapicurú

 

June 2007

Djalma Botelho

 

0.436

 

Itapicurú

 

May 1987

Edivaldo Santos Santiago

 

0.004

 

Itapicurú

 

December 1995

Edivaldo Santos Santiago and his wife

 

0.004

 

Itapicurú

 

December 1995

Edivaldo Santos Santiago

 

8.276

 

Jaboticaba

 

May 2007

Edivaldo Santos Santiago

 

6.334

 

Jaboticaba

 

January 2008

Genivaldo Alves Bispo

 

0.449

 

Itapicurú

 

October 2007

José Mariano Júnior

 

5.227

 

Itapicurú

 

February 2005

José Martins de Olveira

 

22.825

 

Barra/Itapicurú

 

May 2007

José Martins De Oliveira

 

9.823

 

Jaboticaba

 

August 2005

Jovelina Ana Alves

 

Not registered

 

Itapicurú

 

March 1997

Jovelino Bispo do Nascimento

 

2.971

 

Itapicurú

 

April 2007

Luiz Carlos M. Evangelista

 

0.192

 

Itapicurú

 

October 2007

Manoel Xavier Mota

 

0.066

 

Itapicurú

 

April 2007

Márcio de Jesus Silva

 

0.004

 

Itapicurú

 

June 2008

Rita de Cássia Souza Lima

 

0.093

 

Itapicuruzinho

 

March 2005

Rita de Cássia Souza Lima

 

0.023

 

Itapicuruzinho

 

February 2005

Rita de Cássia Souza Lima

 

0.040

 

Itapicurú

 

February 2005

Rita de Cássia Souza Lima

 

0.217

 

Itapicurú

 

March 2005

Rita de Cássia Souza Lima

 

0.653

 

Itapicurú

 

March 2005

Rita de Cássia Souza Lima

 

0.133

 

Itapicurú

 

November 2005

Rita de Cássia Souza Lima

 

0.030

 

Itapicurú

 

April 2005

Valdivino Lopes de Lima

 

17.424

 

Canavieiras

 

January 2007

Total:

 

75.96 ha

 

 

 

 

 

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Table 4-2: Jacobina — Rights of ownership

 

Vendor

 

Area (ha)

 

Location

 

Acquisition Date

 

Registration

Adenício Francisco da Silva

 

21.78

 

Itapicurú

 

August 2007

 

4542

Álvaro de Carvalho Abreu

 

14.99

 

Genipapo e Itapicurú

 

 

Augusto Luiz Vieira Santos

 

91.12

 

Córrego da Barra e Laginha

 

September 2008

 

2063

Augusto Luiz Vieira Santos

 

17.50

 

Barra

 

September 2008

 

3089

Dionízio Moreira dos Santos

 

15.25

 

Barra de Baixo e Roseta

 

July 2007

 

4688

Dionízio Moreira dos Santos

 

35.20

 

Barra de Cima

 

July 2007

 

3779

Francisco Sales Verissimo

 

141.64

 

Genipapo e Itapicurú

 

 

João Macário da Silva

 

31.82

 

Itapicurú

 

July 2007

 

1643

João Macário da Silva

 

51.45

 

Itapicurú

 

July 2007

 

21038

José Monteiro da Silva

 

29.42

 

Estrada Nova Barra

 

June 2007

 

3012

Jovita lima de Oliveira

 

4.42

 

Itapicurú

 

May 2006

 

01-4.547

Luiz Eduardo Lima dos Santos

 

189.69

 

Córrego da Barra e Laginha

 

September 2008

 

6887, 6886, 6883, 6895

Luiz Maximiano dos Santos

 

96.99

 

Córrego da Barra e Laginha

 

 

Maria Adélia Gomes Sales

 

98.36

 

Genipapo e Itapicurú

 

September 2007

 

3095

Unigeo Ltda.

 

261.36

 

Canavieiras

 

 

Total:

 

1,100.99 ha

 

 

 

 

 

 

 

4.3.2                                             MINERAL RIGHTS

 

The mineral rights of the Jacobina property consist of approximately 5,954 ha of mining concessions, 71,045 ha of exploration permits, and one 650 ha mining claim; all of which are held by JMC (Figure 4-2). The leases and granted exploration concessions have been surveyed and are marked by permanent concrete monuments at each corner. A complete list of the mining and exploration concessions with their current status as of April 2020 is included in Appendix A. Exploration concessions are renewable on a three-year basis and have annual fees ranging from US$1.00/ha to US$1.55/ha.

 

Most of mining concessions numbers 157, 608, and 1461 are located within the boundary of Parque Sete Passagens (Seven Passes State Park) or in the park’s buffer zone. While mining is not permitted within the park, JMC has valid mining concessions issued by the National Mining Agency, Agência Nacional de Mineração (ANM) and is currently negotiating for access into the park with state government and park officials.

 

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Figure 4-2: Mining and exploration concessions

 

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JMC does not pay royalties, however, it does pay taxes to the federal mineral sector agency; these taxes, called Compensação Financeira pela Exploração de Recursos Minerais (CFEM) and also known as the Brazilian mining royalty, are set at a rate of 1.5%. JMC does not have any obligations in respect to back-in rights, payments, or other agreements or encumbrances.

 

JMC has all required permits to continue carrying out the proposed mining operations on the Jacobina property. Further details of these permits can be found in Section 20 of this report.

 

4.4                                        ENVIRONMENTAL CONSIDERATIONS

 

The primary environmental considerations and potential liabilities for the Jacobina Mine are related to the operations of the tailings storage facility (TSF) and the management of seepage water and mine water. Yamana prioritizes the management of tailings and is in the process of aligning the company’s tailings management system with best practices proposed by the Mining Association of Canada (MAC), Canadian Dam Association (CDA) guidelines and other international standards.

 

Tailings produced at the mill are currently managed in TSF B2, located approximately 2.5 km north of the main processing plant. TSF B2 is fully lined; this lining limits the flow of tailings or process water into the environment.

 

All water pumped from the underground mines and that seeps from the old tailings facility (TSF B1) is collected and pumped into the TSF B2 impoundment. Similarly, acid rock drainage (ARD) and run-off water in contact with the waste rock piles are monitored and collected for proper containment and/or treatment.

 

As stated in the Environmental Permit, the TSF area will be allowed to dry and consolidate once operations have ceased; this will allow for the installation of a geomorphic low-permeability closure cover and subsequent rehabilitation activities similar to reclamation activities being completed in TSF B1.

 

Additional details on tailings infrastructure and management at Jacobina are provided in Sections 18 and 20 of this technical report.

 

The qualified person responsible for this section is not aware of any other significant factors and risks that may affect access, title, or the right or ability to perform mining and exploration work on the property.

 

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5                                      ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, AND PHYSIOGRAPHY

 

5.1                                        ACCESSIBILITY

 

The Jacobina Mine is located 10 km from the town of Jacobina, which is accessible by paved secondary highway (Routes 130 and 324) from Salvador, the state capital of Bahia, located 340 km to the south-southeast (Figure 4-1) of the mine complex. Well-maintained paved roads from the town of Jacobina provide access to the project.

 

5.2                                        CLIMATE

 

The town of Jacobina is located in a region of subtropical semi-arid climate. Summer months are much rainier than the winter months. Precipitation at Jacobina is somewhat higher than the regional average, likely due to the influence of the mountain range which hosts the deposits. Average annual precipitation is 840 mm, with May to October experiencing relatively less precipitation than the rest of the year. Temperatures vary little throughout the year. July is the coldest month with average daytime highs of 26ºC and nightly lows of 17ºC. February is the warmest month with average daily highs of 32ºC and nightly lows of 20ºC. Mining operations can be carried out on a year-round basis.

 

5.3                                        LOCAL RESOURCES

 

The town of Jacobina was founded in 1722 and is a regional agricultural centre with an official population of 79,247 as reported in 2010 by the Instituto Brasileiro de Geografia e Estatística. It provides all the accommodation, shopping, and social amenities necessary for the mine’s labour force. Electrical services are supplied to the mine by Companhia de Electricidade do Estado da Bahia (COELBA). Telephone and high-speed internet service are available via the town of Jacobina. A combination of water wells, storm water catchment basins, and mine dewatering features satisfies the project’s water requirements.

 

5.4                                        INFRASTRUCTURE

 

Yamana holds sufficient surface rights for mining operations. Currently, the major assets and facilities associated with Jacobina are as follows:

 

·                  Mine and mill infrastructure including office buildings, shops, and equipment.

 

·                  A conventional flotation mill, with leach and carbon-in-pulp (CIP) tanks, which produces gold doré. The processing plant has a current nominal capacity of 6,500 tonnes per day (tpd).

 

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·                  A TSF with a final design capacity for the life of mine (LOM).

 

5.5                                        PHYSIOGRAPHY

 

The town of Jacobina is located at an approximate elevation of 500 m with topography varying from flat terrain to low rolling hills. The immediate area surrounding the Jacobina Mine consists of steep-sided ridges rising to 1,200 m that are underlain by the resistive quartzites, metaconglomerates, and schists in the Serra de Jacobina mountain range (Figure 5-1).

 

The project is located in the upper reaches of the Itapicurú watershed, more precisely in the Upper Itapicurú region. The Itapicurú-Mirim River, an important tributary of the Itapicurú River, represents the main drainage in the mine site area. Groundwater recharge occurs by direct rainfall infiltration. In the Serra de Jacobina, which is underlain by quartzite and conglomerate, rainwater infiltration occurs through fractures, whereas in the recessive topography of the crystalline basement, the recharge occurs mainly through infiltration of porous strata. The recharge is estimated to be higher in the mountains. The water deficit in the region favors the recharge of aquifers only in the rainy season.

 

5.6                                        VEGETATION

 

The area of Jacobina and its surroundings host several ecosystems, including seasonal semi-deciduous forest, the Caatinga (shrublands) in the lower portions of the terrain and Cerrado (dry savannah) vegetation in the upper elevations. The town of Jacobina is located in a region of transition between several vegetation types: (1) the Atlantic Forest and the Caatinga and (2) between the Caatinga and the Cerrado.

 

The main phyto-physiognomy in the drainage region of the Itapicuruzinho watershed is represented by the seasonal semi-deciduous forest, one of the most important phyto- physiognomies of the Atlantic Forest biome. Due to local soil variations and land use over time, the development of secondary forests is observed riparian forests to the slopes and flat areas, where they occur in transition with the Caatinga and Cerrado. In some instances, vegetation of the Caatinga has even been observed along the river banks.

 

The Alluvial Seasonal Forest (FEA), commonly referred to as a riparian forest or gallery forest, is observed along the most enclosed and narrow watercourses. Within the project and the surrounding area, FEAs are observed along the Cuia, Itapicuruzinho, and Canavieiras rivers and their tributaries. Due to its location, this phyto-physiognomy corresponds to the Permanent Preservation Areas. Within the FEAs, the occurrence of dominant arboreal stratum and canopy formation is observed, in addition to the presence of species of ferns and epiphytes (bromeliads and orchids). There is still, however, a strong presence of ecotones, transition zones between areas with distinct abiotic conditions, with undifferentiated communities, where the floras interpenetrate. Shrub-tree Caatinga in particular is observed around the tailing dams, in the

 

24


 

Legal Reserve area, on the banks of the Santo Antonio stream at its intersection with the Itapicuruzinho river around the EMBASA dam, and around the Cuia dam.

 

5.7                                        AVIAN FAUNA

 

The use of birdlife as a biological indicator allows for efficient environmental characterization studies as the degree of change in a given environment can potentially be inferred from the presence or absence of species, decrease in numbers in a given area, or a species’s disappearance. The heterogeneity of habitats and the availability of resources within a landscape is reflected by the composition of bird populations, the variation in species richness, and their abundance. In addition to being a great indicator of the quality and preservation of environments, avifauna is a key group in ecological processes; its high capacity for colonization of regenerating areas, even after intense modification of the environment, makes this group very efficient in the acceleration of successional processes by means of pollination and dispersion of seeds of native plants.

 

In the Jacobina area, a total of 100 taxa were documented in the FEAs, belonging to 33 families and 16 orders. The composition of the avifauna found is characterized by approximately 50% of general habitat species, those that use open areas of both the Caatinga and forests. The most representative families are Tyranidae, Thraupidae, Thamnophilidae and Trochilidae. Finally, approximately 60% of the documented species need forest areas and the majority of these (70%) presented low sensitivity to anthropogenic disturbances, as most Caatinga birds present low and medium sensitivity to man-made disorders.

 

25


 

 

Figure 5-1: Infrastructure and typical landscape

 

A: Serra de Jacobina and mineral processing plant

B: João Belo mine entrance

C: Mineral processing plant

 

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6                                      HISTORY

 

The Serra de Jacobina Mountains have been mined for gold since the late 17th century. Numerous old workings from artisanal miners (garimpeiros) can be seen along a 15 km strike length, following the ridges of the Serra Do Ouro mountain chain (Golder Associates, 2008). Companhia Minas do Jacobina operated the Gomes Costa Mine in the Morro do Vento area between 1889 and 1896, with total reported production of 84 kg of gold from a 130 m long drift. The Canavieiras, João Belo, and Serra Branca mines opened in the 1950s. The Canavieiras Mine was the largest of these operations, and at a capacity of 30 tpd, produced 115,653 t with an average recovered grade of 18.13 g/t gold during the 1950s and 1960s.

 

6.1                                        PRIOR OWNERSHIP

 

The modern history of the Jacobina mining camp began in the early 1970s with extensive geological studies and exploration carried out by Anglo American Corporation (Anglo American). A feasibility study recommended that a mine be developed at Itapicurú (Morro do Vento area) with an initial plant capacity of 20,000 t per month. Mine development commenced in October 1980 and the processing plant was commissioned in November 1982. In 1983, the first full year of operation, production was 241,703 t with a recovered grade of 5.73 g/t gold, yielding 38,054 oz of gold.

 

Exploration between 1984 and 1987 at the João Belo Norte Hill outlined sufficient mineral reserves to warrant an open pit operation, the development of which commenced in August 1989. Concurrently, the processing plant capacity was increased to 75,000 t of ore per month. In 1990, 538,000 t grading 1.44 g/t gold were produced, mainly from the open pit. Total production at Jacobina in 1990 was 45,482 oz of gold from 680,114 t processed, for a recovered grade of 2.08 g/t gold. Underground development at João Belo commenced in 1990.

 

William Multi-Tech Inc. operated the João Belo and Itapicurú mines from August 1996 until December 1998, when the mines were closed due to depressed gold prices and the strong Brazilian currency. From 1983 to 1998, the project processed 7.96 Mt of ore at a recovered grade of 2.62 g/t gold, to produce approximately 670,000 oz of gold. The bulk of historical production came from the Itapicurú (Morro do Vento Intermediate and Morro do Vento Extension) and João Belo areas.

 

In September 2003, Desert Sun completed the required exploration expenditures to earn a 51% interest in the project and then exercised its option to acquire the remaining 49% interest in the project, comprising the mineral rights, mines, and a 4,000 tpd plant located on the Jacobina property. Desert Sun had initiated exploration in the project area in the fall of 2002 and this program was substantially expanded in September 2003. The original property holdings, which extended approximately 62 km along strike, were expanded considerably so that the current property covers a strike length of 155 km.

 

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Reactivation of the João Belo Mine started in April 2004 and ore extraction began in July 2004. The cost of the capital project, including development of the João Belo mine, refurbishment of the mill facilities, and the purchase of all machinery, equipment, and vehicles, was approximately US$37 M. Desert Sun poured the first gold bar at the João Belo Mine in March 2005 and declared commercial production effective July 1, 2005.

 

Desert Sun reactivated the Morro do Vento Mine in August 2005, starting with the 720 Level portal and increasing the profile dimensions of the access adit. In November 2005, Desert Sun reported in the third quarter ending September 30, 2005, that total ore mined was 340,913 t and ore processed was 300,505 t at an average grade of 2.03 g/t gold. Gold production was 18,683 oz at an average cash cost of US$292/oz. The average recovery rate at the mill was 95.4%.

 

Yamana acquired Jacobina when it completed the purchase of Desert Sun in April 2006.

 

6.2                                        HISTORICAL MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

 

Although a number of historical mineral resource estimates and mineral reserve estimates have been prepared for Jacobina throughout its life, none of these estimates are currently regarded as significant.

 

6.3                                        PAST PRODUCTION

 

Total production for Jacobina since mining commenced in 1983 is shown in Table 6-1.

 

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Table 6-1: Summary of gold production at the Jacobina mine, 1983 to 2019

 

Year

 

Tonnes
 Processed
 (t)

 

Gold Feed
 Grade
 (g/t Au)

 

Metallurgical
 Recovery
 (% Au)

 

Gold Produced
 (oz Au)

 

1983

 

241,703

 

5.73

 

85.46

 

38,054

 

1984

 

301,946

 

5.18

 

92.48

 

46,529

 

1985

 

282,878

 

4.56

 

92.50

 

38,345

 

1986

 

311,174

 

3.60

 

92.50

 

33,312

 

1987

 

247,838

 

5.10

 

96.00

 

38,991

 

1988

 

244,628

 

5.33

 

96.00

 

40,238

 

1989

 

257,247

 

3.02

 

96.00

 

23,979

 

1990

 

681,955

 

2.01

 

96.00

 

42,202

 

1991

 

775,839

 

2.70

 

90.30

 

60,847

 

1992

 

594,181

 

2.57

 

89.90

 

44,184

 

1993

 

518,889

 

2.32

 

93.20

 

36,039

 

1994

 

551,141

 

2.54

 

90.00

 

40,582

 

1995

 

579,913

 

2.57

 

95.60

 

45,813

 

1996

 

591,107

 

2.36

 

94.60

 

42,390

 

1997

 

865,681

 

2.13

 

92.20

 

54,778

 

1998

 

741,089

 

1.91

 

93.00

 

42,386

 

1999-2004

 

0

 

0.00

 

0.00

 

0

 

2005

 

906,759

 

1.90

 

96.00

 

53,170

 

2006

 

1,418,508

 

1.86

 

96.00

 

81,272

 

2007

 

1,040,174

 

1.70

 

95.00

 

54,068

 

2008

 

1,388,087

 

1.83

 

89.86

 

73,241

 

2009

 

1,996,989

 

1.88

 

91.77

 

110,514

 

2010

 

2,158,096

 

1.89

 

93.30

 

122,152

 

2011

 

2,148,275

 

1.89

 

93.11

 

121,675

 

2012

 

2,104,683

 

1.84

 

93.73

 

116,862

 

2013

 

1,575,628

 

1.57

 

92.48

 

73,695

 

2014

 

1,419,031

 

1.78

 

92.93

 

75,650

 

2015

 

1,469,095

 

2.17

 

94.43

 

96,715

 

2016

 

1,802,855

 

2.17

 

95.71

 

120,478

 

2017

 

1,978,409

 

2.22

 

96.35

 

135,806

 

2018

 

2,035,457

 

2.30

 

96.21

 

144,695

 

2019

 

2,254,793

 

2.28

 

96.70

 

159,499

 

Total

 

33,484,048

 

2.19

 

93.91

 

2,208,161

 

 

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7                      GEOLOGICAL SETTING AND MINERALIZATION

 

The gold mineralization at Jacobina is hosted almost entirely within quartz pebble conglomerates of the Serra do Córrego Formation, the lowermost sequence of the Proterozoic-age Jacobina Group. This formation is typically 500-m thick but locally achieves thicknesses of up to 1 km.

 

The gold-bearing conglomerate units, known as reefs, range from less than 1.5 m to 25 m in width and can be followed along strike for hundreds of metres, and in some cases for kilometres. Some contacts between the reefs and crosscutting mafic and ultramafic intrusive rocks are enriched in gold. Although they are quite homogeneous along their strike and dip extensions, the gold-bearing conglomerates differ from one another in stratigraphic position and pattern of gold distribution. The differences are likely due to variations in the sedimentary source regions, in the erosion and transportation mechanisms, and in the nature of the depositional environments. Not all conglomerates of the Serra do Córrego Formation are gold-bearing.

 

7.1                                        REGIONAL GEOLOGY

 

The Precambrian terranes of the northeastern part of the São Francisco Craton in the state of Bahia show evidence of prolonged terrane accretion history (Almeida, 1977). The three major Archean crustal units, the Gavião, Serrinha, and Jequié blocks, underwent several episodes of tectonism and metamorphism that culminated in a continent-continent collision during the Paleoproterozoic, when the consolidation of the craton took place along a main orogenic belt named the Itabuna-Salvador-Curaçá mobile belt, as shown in Figure 7-1. All rocks described in the report are metamorphic but as the protoliths are typically evident they are described in the following text by their protolith name. While metamorphic grade may vary considerably in the district, the rocks at the Jacobina Mine are characterized by the development of white mica, andalusite, and locally, kyanite.

 

A prominent zone of crustal weakness within this portion of the craton is the Contendas—Mirante—Jacobina lineament, a 500-km long and approximately north-trending suture zone located close to the eastern margin of the Gavião block (Figure 7-1). A reactivation of the Contendas—Mirante—Jacobina lineament during the Paleoproterozoic, prior to and during the continent-continent collision, gave rise to a continental margin rift-type basin where the siliciclastic sedimentary rocks of the Jacobina Group were deposited.

 

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Figure 7-1: Tectonic assemblage map

 

7.2                                        LOCAL AND PROPERTY GEOLOGY

 

The Jacobina gold district coincides with most of the Jacobina Range, where quartzite, conglomerate, and schist units of the Paleoproterozoic Jacobina Group form a series of north-south-trending mountain ranges that rise up to 1,200 masl (Figure 7-2). The longitudinal north-south valleys as well as the east-west oriented valleys often correspond to recessive ultramafic sills and dykes. The Mairi Complex consists of a group of Archean-aged tonalitic, trondhjemitic, and granodioritic gneiss-dominated basement and related remnants supracrustal rocks of the Gavião Block; it underlies the flatter terrain east of the Jacobina range. East of the Mairi Complex, the fine-grained biotite gneisses of the Archean Saúde Complex also underlie a flat landscape. The transition between the hilly and the flatter topography of the eastern domains corresponds to the exposures of the Archean Mundo Novo Greenstone Belt.

 

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Figure 7-2: Geology of project area

 

7.2.1                                             JACOBINA GROUP

 

The stratigraphic subdivisions of the Jacobina Group (Griffon, 1967; Mascarenhas et al., 1998) have long been controversial. While the stratigraphy in the project area is well documented, it is challenging to develop a usable nomenclature to define the upper formations of the Jacobina Group, specifically the Cruz das Almas, Serra do Meio, and the Serra da Paciência Formations. Pearson et al. (2005) considers that the Jacobina Group only comprises the lower Serra do

 

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Córrego and the upper Rio do Ouro formations, according to sedimentary and stratigraphic studies carried out by Oram (1975), Minter (1975), Strydom and Minter (1976), Couto et al. (1978), and Molinari et al. (1986). The stratigraphic nomenclature developed by these writers has been successfully employed within the project area for over 25 years and its usage has been maintained by Yamana.

 

Serra do Córrego Formation

 

The Serra do Córrego Formation forms the western ridge of the Serra da Jacobina mountain range and is exposed for a strike length of about 90 km. It consists of an interbedded series of orthoquartzite and oligomictic conglomerate units that collectively range in total thickness from 500 to 1,000 m. The conglomerate pebbles are composed of polycrystalline quartz with rare, fine-grained, fuchsite- and rutile-bearing quartzite. The conglomerate matrix is composed of quartz, sericite, and fuchsite with detrital zircon, non-chromiferous rutile, tourmaline, and chromite grains (Ledru et al., 1964).

 

The geological map (Figure 7-3) of the Jacobina area shows the distribution of the Serra do Córrego Formation. Figure 7-4 shows the stratigraphy of the Serra do Córrego Formation and the stratigraphic correlations between the various mine centres at Jacobina. Within the project area, the Serra do Corrego formation is divided into three units:

 

·                  The Lower Conglomerate (40—200-m thick) outcrops along the lower parts of the western slopes of the Serra do Córrego, Morro do Cuscuz, and Morro do Vento areas and is composed of interbedded quartzite, pebbly quartzite, and conglomerate units. The reef zones consist of oligomictic conglomerates that are interbedded with orthoquartzite. Pebble sizes range from 35 to 60 mm. This unit hosts the gold deposits of the Basal Reef and the Main Reef.

 

·                  The Intermediate Quartzite (130—425-m thick) consists primarily of orthoquartzite with little or no conglomerate. The upper part of this unit is characterized by a distinct horizon known as the “marker schist”, a highly sheared quartz-sericite-chlorite-andalusite schist.

 

·                  The Upper Conglomerate (120—400-m thick) comprises quartzite and pebbly quartzite interbedded with a number of conglomerate layers. The reef zones consist of interbedded conglomerate and orthoquartzite units with pebble sizes ranging from 50 mm at Canavieiras in the north to 100 mm at the João Belo Mine in the south. The Upper Conglomerate Unit hosts the main gold orebodies of the Canavieiras, Morro do Vento, João Belo and Serra do Córrego mineralized areas.

 

Oram (1975), Minter (1975), and Strydom and Minter (1976) concluded, based on isopachs and pebble size data, that the paleoslope during the sedimentation of the Serra do Córrego Formation was inclined to the west. The westerly paleocurrent direction, indicated by the vector

 

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data, drained a provenance area to the east of the present outcrop area, and deposited these sediments in a fluvial environment.

 

Rio do Ouro Formation

 

The Rio do Ouro Formation is composed of mostly pure, fine-grained to medium-grained quartzite which can be either white, gray, or light green in colour. The formation contains subordinate quantities of calcareous pelitic rocks which are intercalated with the various quartzite beds.

 

The presence of this formation is interpreted to mark the change from the fluvial sedimentary environment of the Serra do Córrego Formation to a shallow marine, intertidal depositional environment. This change in depositional environment is suggested by a change in the paleocurrent patterns as indicated by ripple marks, small-scale cross-bedding, and larger-scale herringbone cross-bedded features. The transition from the Serra do Córrego Formation to the Rio do Ouro Formation is marked by the presence of conglomerate units with limited lateral continuity. These locally developed conglomerate beds are present at the base of the Rio do Ouro Formation.

 

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Figure 7-3: Geology of the Jacobina Mine Complex

 

35


 

 

Figure 7-4: Stratigraphic correlation between mining blocks

 

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7.2.2                                             ULTRAMAFIC SILLS AND DYKES

 

The deep longitudinal valleys bordering the mountains which form the Jacobina range often correspond to weathered pre- to syn-tectonic mafic to ultramafic sills and dikes. These intrusive rocks include dark green peridotite and pyroxenite, which acquire a brownish stain where weathered (Teixeira et al., 2001). According to these authors, deformation and metamorphism, coupled with hydrothermal alteration, have transformed these rocks into fine-grained schists containing talc, serpentine, chlorite, tremolite, and carbonate. In the project area, the ultramafic rocks, which were emplaced along both north-trending and east-trending structures, affected and reacted with the host rocks (quartzite and conglomerates of the Serra do Córrego and Rio do Ouro formations) producing metre-scale alteration zones in the hosts. The ultramafic rocks display textural variation from aphanitic borders to a medium to coarse-grained core, typical intrusive textures.

 

These intrusive rocks are known to locally host minor gold mineralization within the project area, and at several other places like Rio Coxo, Jaqueira, Mina Velha, and Várzea Comprida. The age of these sills and dikes is still unknown, but since they are deformed, they are interpreted to be of Archean or Paleoproterozoic age.

 

7.3                                        STRUCTURAL GEOLOGY

 

Different styles of deformation are recognized within the Jacobina Group and surrounding Archean rocks, along and across the northern portion of the 50-km long north-trending Contendas—Mirante—Jacobina lineament. Thrust faults, oblique sinistral-reverse faults, and regional tight and open folds were developed in response to the strong westward-verging mass transport event caused by the Paleoproterozoic continent/continent collision.

 

To the west, the Jacobina Group is thrust over the Archean Mairi Complex, the Campo Formoso Mafic—Ultramafic Complex, and the late- to post-tectonic granitic intrusions (Miguel Calmon-Itapicurú, Mirangaba-Carnaíba and Campo Formoso intrusions), along a thrust fault named the Jacobina Fault. This structural setting changes eastwards to a series of steeply east-dipping blocks, bounded by east-dipping subparallel reverse faults.

 

As a result of the regional compression associated with the development of the Itabuna- Salvador-Curaçá fold belt, a series of ductile shear zones and brittle faults have developed in the area. The main elements of these include a series of north-trending strike-slip faults with a sinistral sense of movement, east-trending strike-slip faults with a dextral sense of movement, and northwest-trending shear zones with a sinistral sense of movement. These post-mineralization structures displaced and offset the various gold-bearing zones (Figure 7-5).

 

The Serra do Córrego Formation is exposed on the west side of the Jacobina Range where it forms part of an extensive homocline that dips consistently 50° to 70° to the east and youngs to

 

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the east, as indicated by ripple marks and cross-bedding. This orientation is interpreted to be the result of tilting during the intrusion of the late- to post-tectonic Mirangaba-Carnaíba granite.

 

 

Figure 7-5: Examples of post-mineralization faults and shear zones

 

7.4                                        MINERALIZATION

 

The Jacobina gold district is defined by a 40-km long belt that extends from Campo Limpo, in the south, to Santa Cruz do Coqueiro, in the north. The vast majority of significant gold mineralization occurs within the matrix of the conglomerates; these include the Canavieiras, Morro do Vento, João Belo, Serra Branca deposits as well as other minor occurrences.

 

At Jacobina, the age of deposition of the host sedimentary sequence was broadly bracketed between 3.2 Ga and 2.3 Ga; however, the conglomerates yielded more restricted detrital zircon U-Pb ages of 3.4 to 3.2 Ga. (Teles at al., 2014), providing a maximum age. The deposit was overprinted by deformation and hydrothermal alteration associated with a younger orogenic

 

38


 

event (at 1.9 Ga (Ledru et al. 1997)) that generated pervasive silicification, the development of chrome-sericite (fuchsite), and some gold remobilization along fractures and faults.

 

The gold mineralization found at Jacobina occurs as two styles of mineralization (Texeira et al, 2001):

 

·                  Conglomerate-hosted placer gold mineralization (the most important mineralization type in the Jacobina district)

 

·                  Post-depositional gold-bearing stockwork, shear zones, and associated extensional quartz veins. These styles of mineralization are relatively minor and do not contribute to the established resources at Jacobina.

 

The characteristics of these two styles of mineralization are described in the following subsections.

 

7.4.1                                             CONGLOMERATE-HOSTED PLACER GOLD MINERALIZATION

 

Conglomerate-hosted deposits contain very fine grains of native gold, typically 20 to 50 µm in size, hosted in the matrix of the conglomerate. Gold may also be associated with rounded pyritic aggregates believed to be of sedimentary origin. There are no other significant elements present, with detailed studies of the reef chemistry showing only very minor enrichment in iron, titanium and uranium in some reefs associated with rounded grans of uraninite, ilmenite and rutile. Mineralization is typically hosted by well sorted, clast-supported conglomerate and may comprise micro-fractured, gold-bearing, recrystallized, silicified, and pyritic conglomerate units of the Serra do Córrego Formation, with a greenish fuchsite matrix and common hematite coatings along shear planes, joints, and fracture surfaces. Gold mineralization does not display a correlation with the pyrite or fuchsite content of the rock, although well-mineralized reefs are typically enriched in hematite and may contain red colored, oxidized pebbles.

 

A north-trending and steeply dipping ultramafic dyke (Vale_ITV on Figure 7-5) subdivides the area into West and East blocks. All mineralized reefs that are exposed at surface along the west flank of the Serra do Córrego Formation (Figure 7-3) to the west of this dyke are considered on the West Block, whereas their down-dip extensions that are located east of the dyke, such as all of the Canavieiras zones, are considered on the East Block.

 

Gold mineralization rarely occurs in the pebbles themselves; however, when it does, it is along fractures. The interbedded quartzite units also host gold mineralization but almost exclusively along fractures, especially near late mafic dikes.

 

Historically, the most important past producers have been the Basal and Main reefs of the Lower Conglomerate Unit and the lower part of the Upper Conglomerate Unit. It is important to note, however, that only certain reefs within particular lithological units are gold-bearing. Other nearby subparallel reefs with similar sedimentary features may not be gold-bearing.

 

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In addition, there is considerable local lateral variation in grade within particular reefs. For example, the Main and Basal reefs are well mineralized in the Morro do Vento Sector but are essentially barren to sub-economic in the Joao Belo and Canavieiras sectors. Despite this local grade variation, the overall average grade, based on production records, is remarkably consistent both along strike and down dip within specific ore shoots.

 

Figure 7-6 shows a cross-section of the João Belo area. In the mine area, stratigraphy dips consistently eastward at 50° to 70°, with some local flatter zones. Cross-bedding and ripple marks indicate that the sequence youngs upwards (i.e., stratigraphic tops are towards the east). Table 7-1 summarizes the principal characteristics of the main gold-mineralized reefs at Jacobina and lists the abbreviations for each reef.

 

Figure 7-6: Generalized cross-section through the Morro do Vento Mine

 

EMB= Itapicarú intrusion, QTO=Quartzite, ITV_VALE = Mafic to ultramafic intrusion; Table 7-1 lists the key to the reef code abbreviations.

 

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Table 7-1: Characteristics of gold mineralization at Jacobina

 

Zone

 

Code

 

Location

 

Strike
length
(m)

 

Thickness (m)

 

Average
Grade
(g/t Au)

 

Description

Morro do Vento / Morro do Vento Extension / Morro do Cuscuz (Itapicurú)

 

 

LVLPC

 

LVLPC

 

Morro do Vento

 

400

 

2

 

4.8

 

Large to very large pebbles, only locally mineralized

MU (Upper) Reef

 

MU

 

Morro do Vento

 

1700

 

3 to 10

 

2.0

 

Medium to small pebbles

LU (Lower) Reef

 

FLU

 

Morro do Vento

 

1700

 

3 to 10

 

2.4

 

Medium to large pebbles

Hangingwall Reef

 

HW

 

Morro do Vento

 

3000

 

1 to 6

 

2.4

 

Large to medium pebbles

Main Reef

 

MR

 

Morro do Vento

 

3000

 

Beds: 0.1 to 3 Zone: up to 12

 

6.0

 

Pyritic, small to medium pebble conglomerate beds. Three channels of deposition, broken by faults.

Footwall Reef

 

FW

 

Morro do Vento

 

3000

 

Beds: 0.1 to 6

 

2.4

 

Pyritic, small to medium pebble conglomerate beds.

Basal Reef

 

BR

 

Morro do Vento

 

1600

 

3 to 10

 

4.0

 

Small to medium pebbles, enrichment of gold at its upper and lower portions.

Canavieiras

 

 

 

 

 

 

 

 

 

 

 

 

Maneira

 

 

 

Canavieiras

 

>600

 

Beds: 0.4 to 7 Zone: up to 70

 

1.7

 

Large to very large pebbles

Holandez

 

 

 

Canavieiras

 

>600

 

Beds: 0.9 to 6 Zone: up to 30

 

1.7

 

Large to medium pebbles

MSPC

 

MSPC

 

Canavieiras

 

800

 

2 to 4

 

4.4

 

Medium size pebbles with abundant pyrite

LVL

 

LVL

 

Canavieiras

 

2600

 

0.5 to 5

 

2.6

 

Large to very large pebbles

Piritoso

 

 

 

Canavieiras

 

>600

 

1 to 3

 

9.5

 

Medium size pebbles with abundant pyrite

Liberino

 

 

 

Canavieiras

 

>600

 

1 to 3

 

6.1

 

10 m above Piritoso; medium to large pebbles

MU

 

MU

 

Canavieiras

 

>400

 

10 to 25

 

3.2

 

Pyritic, medium to large pebble conglomerates

LU

 

LU

 

Canavieiras

 

>400

 

1 to 10

 

2.2

 

Pyritic, large pebble conglomerate

João Belo

 

 

 

 

 

 

 

 

 

 

 

 

LVLPC

 

LVLPC

 

João Belo North

 

>1,000

 

1 to 3

 

4.4

 

Large to very large pebbles

LMPC

 

LMPC

 

João Belo North

 

>1,000

 

10 to 25

 

2.2

 

Large to medium pebbles

MPC

 

MPC

 

João Belo North

 

>1,000

 

1 to 4

 

3.6

 

Medium sized pebbles; locally contains gold values

 

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Figure 7-7: Photographs of conglomerate-hosted gold mineralization

 

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7.4.2                     POST-DEPOSITIONAL GOLD-BEARING STOCKWORK, SHEAR ZONES AND EXTENSIONAL QUARTZ VEINS

 

This group encompasses gold-bearing extensional quartz veins and veinlets related to semi-concordant shear zones hosted by quartzites, andalusite-graphite-quartz schists, and local conglomerates of the Rio do Ouro Formation (e.g., Goela da Ema, Biquinha, Cercadinho and Guardanapo gold workings). This style of gold mineralization is a very minor volumetric component at Jacobina and does not contribute significantly to the mineral resource. The main hydrothermal alterations associated with this style of mineralization are silicification, sericitization, chloritization, and pyritization (locally with chalcopyrite), and local tourmalinization.

 

The ultramafic and mafic rocks also host mineralization as narrow shear zones up to 4 m-thick in north-south oriented ultramafic sills and dikes, close to their footwall and hangingwall contacts with the hosting quartzite and conglomerate units of the Serra do Córrego, Rio do Ouro, and Serra da Paciência Formations. The mineralized shear zones are characterized by the development of gold-bearing quartz veins and/or stockwork. The main hydrothermal alteration types are silicification, fuchsitization, pyritization, and sericitization, with local tourmalinization. A number of examples of this group are known at the mine sites and surrounding areas (Canavieiras, Itapicurú, Serra do Córrego, Morro do Vento, and João Belo), and at Serra da Paciência (Mina Velha, Várzea Comprida, Ciquenta e Um, Cabeça de Nego and Milagres gold workings), in the north. This style of mineralization does not contribute significantly to the mineral resource at Jacobina.

 

7.5                               ALTERATION

 

The overprinting hydrothermal alteration event at the Jacobina deposit consists of pyrite, pyrrhotite, quartz, chrome-sericite (fuchsite), chrome-rutile and chrome-tourmaline. The chromium-rich nature of this alteration assemblage is attributed to leaching of the mafic-ultramafic intrusive rock by circulating hydrothermal fluids.

 

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8                                         DEPOSIT TYPES

 

The mineralization at Jacobina consists of conglomerate-hosted gold deposits generally interpreted to represent paleoplacer gold deposits, with some post-depositional modification by structural and hydrothermal events (Bateman, 1958; Cox, 1967; Gross, 1968; Minter, 1975; Strydom and Minter, 1976; Hendrickson, 1984). This type of deposit is similar to the Witwatersrand and Tarkwa deposits in South and West Africa (Pearson et al., 2005).

 

Karpeta (2004) argues that the gold was detrital and brought in and concentrated by fluvial processes. Several lines of evidence, with quoted similarities to both the Tarkwa and the Witswatersrand deposits, are provided.

 

1.              Gold is not generally evenly distributed throughout the conglomerates, but concentrated in the top of the conglomerate beds with clean cross-bedded quartzite above them. This concentration of gold result from the aggradation and then incision of a braided fluvial system.

 

2.              Gold mineralization appears to show a strong positive relationship with pebble size. This shows that gold grade can be correlated with fluvial current dynamics.

 

3.              Although gold is always associated with pyrite and hematite, hematite and pyrite commonly occur without gold. This suggests that gold concentration is independent of the distribution of pyrite, hematite, and chrome-sericite.

 

4.              Gold grade is higher in better-sorted, clast-supported conglomerates than in more poorly sorted matrix-supported conglomerate. This indicates that gold grade appears to be related to the degree of reworking of a conglomerate (although it could be related to their relative porosity/permeability characteristics).

 

5.              Higher-grade zones have a well-defined plunge that is postulated to coincide with the predominant paleocurrent direction.

 

Teles et al. (2014) further note that the mineralized conglomerates at Jacobina have rounded grains of pyrite and gold, as well as uraninite, indicating detrital deposition.

 

Native gold is also present as flakes and thin films along fracture surfaces within the conglomerate units, and less frequently in the quartzite, suggesting remobilization of gold during a hydrothermal event (Karpeta, 2004) as described in Section 7.5.

 

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9                                         EXPLORATION

 

Since acquiring Jacobina in 2006, Yamana has carried out regional mapping and sampling with the goal of identifying additional surface occurrences of mineralized conglomerates along the strike length of the Jacobina belt. The geological mapping team measured the surface locations of such mineralized outcroppings of conglomerates by means of a hand-held Garmin GPS unit (using the Córrego Alegre datum). For each occurrence, data collected included the host rock, the type and size of conglomerate pebbles, and descriptions of relevant geological features such as the presence of visible gold and type and intensity of alteration minerals (hematite, fuchsite, pyrite, and chlorite). All information was entered into a master geological database.

 

Chip or grab samples, mainly of conglomerate, were collected; samples weighed between one and three kilograms. A total of 9,629 chip samples were collected on the property by Yamana between 2010 and 2019. Samples were submitted to the Jacobina analytical laboratory for determination of their gold content. All chip samples were processed according to Yamana’s quality assurance/quality control (QA/QC) protocols.

 

In 2018, a structural mapping program was carried out on surface in the immediate vicinity of the mines. The program focussed specifically on the Serra do Córrego, Canavieiras North, Canavieiras Central, and Canavieiras South mine areas, in addition to the Lagartixa and Morro da Viúva target areas (Figure 9-1). The results were used to reinterpret the structural setting and genesis of the Jacobina style of mineralization. This improved understanding informed the drilling programs completed in 2018 and 2019.

 

The significant exploration results at Jacobina that are material to this technical report were obtained by underground core drilling. This work and resulting interpretations are summarized in Sections 10, 14, and 15 of this technical report.

 

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Figure 9-1: Location of geological mapping and sampling programs

 

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9.1                               EXPLORATION POTENTIAL

 

Exploration during 2018 and 2019 has focussed on the higher grade deposits within the mine complex and have led to the discovery of significant extensions to mineralization at Moro do Vento, Moro do Cuscuz and Canavieiras. Drilling in 2019 has extended Canavieiras Sul both down dip and along strike and expanded the Canavieiras Central zone with excellent intercepts in the LU, MU, and LVLPC reefs. Notable results include the following estimated true width intervals: 10.5 g/t of gold over 5.4 metres (drill hole CAS492); 5.3 g/t of gold over 3.4 metres (drill hole CAS473); 4.8 g/t of gold over 4.2 metres (drill hole CAS471); 3.4 g/t of gold over 9.5 metres (drill hole CANEX60A); and 3.4 g/t of gold over 2.7 metres (drill hole CANEX86) while drilling down plunge on the high grade.

 

The Morro do Vento sector also continues to provide excellent results and show high potential as a new area for mineral reserve growth. Ongoing exploration drilling on a high grade shoot at Morro do Vento has defined the down plunge continuation of the Main, Hangingwall, and Footwall reefs with the following significant intercepts with estimated true width: 7.4 g/t of gold over 5.5 metres (drill hole MVTEX46); 8.4 g/t of gold over 2.3 metres (drill hole MVTEX32); and 4.9 g/t of gold over 3.3 metres (drill hole MVTEX43).

 

Overall, these exploration and infill drilling results suggest a significant expansion of both mineral reserves and mineral resources within the Canavieiras and Morro do Vento sectors by the end of 2020, while new potential in the João Belo and Morro da Viúva sectors indicate excellent potential for expansion of inferred mineral resources (Figure 9-2). The results, at minimum, support the Phase II Expansion production scenario presented in Section 24 of this technical report.

 

In terms of the regional exploration potential, the favourable gold-bearing stratigraphy at Jacobina has been traced along a strike length for approximately 150 km (Figure 9-1). Exploration programs have discovered many gold occurrences along this favourable stratigraphy, including the Jacobina Norte project, where gold mineralization has been discovered along a continuous 15-km-long trend (Figure 9-1).

 

47


 

 

Figure 9-2: Jacobina longitudinal section showing down-plunge exploration potential

 

48


 

10                               DRILLING

 

From 1970 to the end of December 2019, approximately 868,469 m of surface and underground drilling has been completed in the Jacobina project area (Table 10-1, Table 10-2, Figure 10-1 and Figure 10-2). Surface drilling is done using NQ-diameter (47.6 mm)-sized core; underground drilling uses LTK48-diameter core (35.3 mm) and BQ-diameter core (36.5 mm). The drill contractors used for surface drilling on the property were Geoserv Pesquisa Geologicas S.A., WFS Sondagem Ltda., Geocontrole, and Geologia e Sondagens Ltda. (Geosol). Underground core drilling was completed by Jacobina personnel. Any unsampled core is stored on site at the core storage facility.

 

Table 10-1: Summary of drilling history between 1970 and December 31, 2019

 

Company

 

Period

 

No. Drill Holes

 

Metres Drilled

 

Anglo American

 

1970 - 1996

 

886

 

109,697

 

William Multi-Tech

 

1996 - 1998

 

134

 

9,235

 

Desert Sun

 

2003 - 2006

 

429

 

63,426

 

Yamana

 

2006 - 2019

 

5,790

 

686,111

 

Total

 

 

 

7,239

 

868,469

 

 

Table 10-2: Historical distribution of drilling by mine as of December 31, 2019

 

Mining Block

 

Type

 

No. Drill Holes

 

Total Length
(m)

 

João Belo

 

Surface

 

83

 

36,046

 

 

Underground

 

2264

 

181,808

 

Morro do Vento

 

Surface

 

224

 

57,526

 

 

Underground

 

1373

 

106,647

 

Morro do Cuscuz

 

Surface

 

42

 

13,673

 

 

Underground

 

491

 

47,433

 

Serra do Córrego

 

Surface

 

118

 

25,037

 

 

Underground

 

519

 

52,966

 

Canavieiras South

 

Surface

 

54

 

30,006

 

 

Underground

 

543

 

89,951

 

Canavieiras Central

 

Surface

 

55

 

27,137

 

 

Underground

 

343

 

56,074

 

Canavieiras North

 

Surface

 

35

 

9,190

 

 

Underground

 

751

 

62,499

 

Exploratory

 

Surface

 

106

 

32,014

 

 

Underground

 

8

 

2,552

 

Others

 

 

 

230

 

37,910

 

Total

 

 

 

7,239

 

868,469

 

 

49


 

 

Figure 10-1: Distribution of drilling, by mine, as of December 31, 2019 (top); Drilling by year (2010—2019) (bottom)

 

50


 

 

Figure 10-2: Location of drill holes

 

51


 

Jacobina geologists follow a series of standard operating procedures (SOPs) for the planning and execution of surface-based and underground-based core drilling programs (Table 10-3). In brief, the procedures currently used during the core drilling programs are as follows:

 

1.              The collar locations of all drill holes are marked by Jacobina survey crews prior to drilling and the collars are surveyed using a differential base-station GPS after the completion of the drilling.

 

2.              A Reflex Gyro survey instrument is used to provide control information on the directional deviation (both azimuth and inclination) at three-metre intervals in each hole.

 

3.              Core is placed in labelled boxes at the drill site and the boxes are transported by the drill contractor to the logging facility.

 

4.              All core is photographed.

 

5.              Company geologist conduct lithological logging of drill core and recording of geotechnical observation, describing all downhole data including assay intervals. All information is recorded on paper forms and then entered in digital format. The following features are recorded:

 

·                  Core diameter

·                  Rock quality designation measurements

·                  Core recovery record

·                  Downhole inclination

·                  Lithological contacts

·                  Description of geology

·                  Recording of heavy mineral and sulphide content

·                  Type and intensity of various alterations

·                  Structural features, such as fractures and fault zones

·                  Core angles

·                  Sampling intervals

 

52


 

Table 10-3: Drilling procedures

 

Procedure Number

 

Description

Planning and Execution

POP-04-12-3.5-227

 

Drill hole planning

POP-04-12-3.5-358

 

Diamec U6 drill rig operation

POP-04-12-3.5-213

 

Diamec 252 drill rig operation

POP-04-12-3.5-001

 

Channel sampling and underground geological mapping

POP-04-12-3.5-412

 

Mobilization, demobilization, and operation of drill rigs

Logging and Sampling

POP-04-12-3.5-318

 

Storage and organization of geological data and responsibilities

POP-04-12-3.5-372

 

Drill hole deviation measurement

POP-04-12-3.5-380

 

Photographic record of drill cores

POP-04-12-3.5-072

 

Lithological description

 

No overall core recovery statistics were reviewed, but it is estimated that overall core recovery is greater than 95%. The sampled core should provide a reliable reflection of the mineralization in the mining operation.

 

Drilling activities at Jacobina have been successful at expanding the extent of known gold mineralization and in defining the plunge of the higher-grade portions of mineralized zones. The results and interpretations of this work are summarized in Sections 14 and 15.

 

The qualified person responsible for this section of the technical report is of the opinion that the logging and recording procedures are consistent with industry standards, and that there are no known drilling, sampling, or recovery factors that could materially affect the accuracy and reliability of the results.

 

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11                               SAMPLE PREPARATION, ANALYSES, AND SECURITY

 

Analytical samples include both drill core and channel samples. The drill core samples are generated from exploration and infill drilling programs that are conducted on surface and underground; they are used for target generation and estimation of mineral resources and reserves. The channel samples come from underground grade control channels in development drifts; they are used for short-term forecasting and grade control as well as for estimation of mineral resources and reserves.

 

11.1                                 SAMPLE PREPARATION AND ANALYSIS

 

Sample preparation and analysis at Jacobina are carried out according to a series of SOPs (Table 11-1). The current methodology of sampling drill core and underground workings at Jacobina is described below.

 

Table 11-1: List of sample preparation and analytical standard operating procedures

 

Procedure Number

 

Description

 

POP-04-12-3.5-060

 

Storage and disposal of cores, chips, and pulps

 

POP-04-12-3.5-381

 

Drill core sampling

 

POP-04-12-3.5-403

 

QA/QC protocol

 

POP-04-12-3.5-404

 

Rock density test

 

POP-04-12-3.5-077

 

Preparation and dispatch of samples to the laboratory

 

POP-04-12-3.5-337

 

Sample reception by the laboratory

 

POP-04-12-3.5-359

 

Sample preparation

 

POP-04-12-3.5-367

 

Gold analysis by fire assay (FA)

 

POP-04-12-3.5-370

 

Gold determination by atomic absorption

 

 

Sampling of Drill Core:

 

1.              Sampling/assay intervals are generally 0.5 m in length in the conglomerates and 1.0 m in the boundary quartzites, but can be shorter to respect geological boundaries. Four 0.5 m boundary samples are taken from the waste quartzites on each side of a conglomerate intersection.

 

2.              Sample numbers are assigned to the intervals. Certified standards and blanks are inserted into the sample stream.

 

3.              Core samples from the surface drilling (HQ and NQ core diameter, 63.5 mm and 47.6 mm, respectively) are cut in half by saw; one half is sent for assay and the remainder is stored on site. Underground drill core (BQ and LTK48 core diameter, 36.5 mm and 35.3 mm, respectively) is sampled in its entirety.

 

54


 

4.              Exploration drill core samples are placed in bags and are sent to the commercial laboratory ALS Chemex (ALS) laboratory in Vespasiano, Brazil, for preparation and analysis.

 

5.              Infill drill core samples are placed in bags and are sent to the mine laboratory at Jacobina for preparation and analysis.

 

Underground Channel Sampling:

 

1.              Underground faces are washed and the contacts of the mineralization are marked.

 

2.              Channel samples are taken at right angles to the dip across the face in both ore and waste, respecting the geological contacts. The normal sample length is 0.5 m.

 

3.              Samples are bagged and sent to the Jacobina Mine Laboratory for preparation and assaying. Certified standards and blanks are inserted into the sample stream.

 

The results of the underground channel samples are used for short-term forecasting and grade control as well as in the grade estimation process for resource models.

 

In the opinion of the qualified person responsible for this section of the technical report, the sampling methodologies at Jacobina conform to industry standards and are adequate for use in mineral resource estimation.

 

Preparation and Analytical Procedures

 

Samples from the exploration drilling programs are assayed using ALS and the Jacobina laboratory as the primary laboratories, and SGS Geosol Lab Ltda (SGS Geosol) as the secondary laboratory, both located in Vespasiano, Minas Gerais state, Brazil. Samples from the infill drilling programs and from the grade control channels are assayed using the Jacobina laboratory as the primary laboratory and using SGS Geosol located in Vespasiano, Brazil, as the secondary laboratory. The Jacobina laboratory is owned and operated by Yamana and is not accredited. ALS and SGS Geosol laboratories are independent of Yamana and are accredited under ISO/IEC 17025.

 

The following procedures, including the insertion rate of the QA/QC samples, are used by the Jacobina laboratory and ALS laboratory for sample preparation and analysis:

 

1.              A submittal form is filled out by a Jacobina geologist or technician and delivered with the samples to the Jacobina laboratory or to ALS.

 

2.              Samples are sorted, logged in, opened, and dried at 110ºC.

 

3.              The entire sample is crushed in a jaw crusher to better than 90% passing 10 mesh. Crushers are cleaned with compressed air between every sample

 

55


 

and with a quartz blank wash every 20th sample. Every second quartz blank wash sample is placed into the analytical sequence. Granulometric checks on the crushed material are done three times per shift.

 

4.              A 500 g subsample is taken by a rotary splitter or by Jones riffle splitter. The split is pulverized using a steel ring mill to better than 95% passing 150 mesh. Pulverizers are cleaned with compressed air after each sample and with a quartz wash after every 20th sample. Every second quartz wash sample is placed into the analytical sequence. Granulometric checks on the pulverized material are done three times per shift.

 

5.              Standard fire assay (FA) methods using a 50 g pulp sample are used to determine total gold content. Samples containing visible gold can be assayed using a screened metallic assay protocol. In this procedure, a 500 g or 1 kg split is pulverized to 95% passing 150 mesh; screening this pulp results in a fine and coarse fraction (possibly containing coarse gold) which are assayed separately.

 

6.              The sample, fluxes, lead oxide litharge, and silver are mixed and fired at 1,100 to 1,170ºC for 50 to 60 minutes so that precious metals report to the molten lead metal phase. The samples are removed from the furnace and poured into moulds. Next, the slag is removed from the cooled lead button and the button is placed in a cupel and fired at 920ºC to 960ºC for one hour to oxidize all the lead and render a precious metal bead.

 

7.              The cupels are removed from the furnace and the beads are separated by acid digestion using nitric and hydrochloric acid to dissolve the precious metals into solution. The sample solutions are analyzed by an atomic absorption spectrophotometer-AAS. For screened metallic assays, the coarse fraction is assayed in total and an aliquot of the fine fraction is analyzed. The gold concentration of the entire sample is determined by weighted average.

 

8.              Analytical batches contain 42 client samples, two pulp duplicates, two reagent blanks, and two certified standards.

 

The qualified person responsible for this section of the technical report is of the opinion that the sample preparation, analytical, and assay procedures of drill core samples used for exploration and delineation are consistent with industry standards and adequate for use in the estimation of mineral resources.

 

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11.2                                 QUALITY ASSURANCE/ QUALITY CONTROL MEASURES

 

Yamana employs a comprehensive QA/QC program for monitoring the assay results of exploration drilling programs, infill drilling programs, and grade control channel samples.

 

Yamana and JMC use certified reference materials (CRM or standards), blanks, field and coarse crush duplicate samples and pulp duplicates to monitor the precision, accuracy, contamination and quality of the laboratories. These standards are purchased from Geostats Pty Ltd. (Geostats) and ORE Pty Ltd. (OREAS), both in Australia. Currently, Yamana has protocols in place for describing the frequency and type of QA/QC submission, the regularity of analysis of QA/QC results, and failure limits. There are also set procedures to be followed in case of failure, or for flagging failures in the QA/QC database.

 

The results from the QA/QC program are reviewed and monitored by a dedicated Quality Control team who presents the results by means of detailed reports on a regular basis. These results are discussed in Section 12 of this technical report.

 

11.2.1                                      STANDARDS

 

For drill core samples, Yamana inserts one standard for every 30 samples submitted to the primary laboratories (ALS or Jacobina laboratory). For channel samples, Jacobina geology staff insert one standard for every 40 channel samples submitted to the Jacobina laboratory. Standards of low, medium, and high gold grades are supplied in pre-packaged bags purchased from Geostats and OREAS. Geostats and OREAS provide Yamana with certificates listing the round-robin assay results and the expected standard deviation for each standard. The certified values are provided in Table 12-2.

 

Jacobina exploration staff submitted 2,949 standards with drill core samples between January 2019 and December 2019 (submission frequency of one standard per 32 samples). Between January 2019 and December 2019, Jacobina geology staff submitted 643 standard samples with channel samples (submission frequency of one standard per 39 samples).

 

11.2.2                                      BLANK SAMPLES

 

Blank samples are composed of siliceous material which is known to contain gold grades that are less than the detection limit of the analytical method (< 0.005 g/t gold) for both the Jacobina laboratory and ALS laboratory. Yamana inserts one blank sample for every 30 drill core samples submitted to the Jacobina laboratory and ALS laboratory. Jacobina geology staff insert one blank sample for every 40 channel samples submitted to the Jacobina laboratory.

 

Between January 2019 and December 2019, Jacobina exploration staff submitted 3,028 blank samples with drill core samples (submission frequency of one blank per 31 samples); geology staff submitted 735 blank samples with channel samples (submission frequency of one blank per 34 samples).

 

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11.2.3                                      COARSE CRUSH DUPLICATES

 

Yamana’s procedure requires the submission of one coarse crush duplicate for every 20 samples. Between January 2019 and December 2019, 4,605 drill core coarse crush duplicate samples and 1,325 channel sample crush duplicate samples were analyzed for gold.

 

The submission frequency in 2019 was one coarse crush duplicate per 20 drill core samples, and one coarse crush duplicate per 19 channel samples.

 

11.2.4                                      FIELD DUPLICATES

 

Yamana’s procedure requires the submission of one field duplicate for every 20 samples. Between January and December 2019, 1,231 drill core field duplicate samples (one for every 24 samples) and 715 channel field duplicate samples (one per 34 samples) were analyzed for gold.

 

The procedure for sampling the drill core field duplicate is to saw the core in half, and to saw one of those halves to create two quarter-core samples. One quarter-core is sent as a regular sample and the other quarter-core is sent as the field duplicate for that same interval. The remaining half-core is stored in the box in the core shed.

 

Underground channel field duplicate procedure consists of collecting a separate sample parallel to the original sample from the underground rock face.

 

11.2.5                                      INTER-LABORATORY PULP DUPLICATES

 

The Jacobina laboratory and the ALS laboratory send 5% of pulp samples, as selected by Jacobina staff, on a monthly basis to the SGS Geosol laboratory in Vespasiano, Brazil, which is an independent ISO 9001-2015- and ISO/IEC 17025:2005- certified laboratory for check assays reanalysis. Analysis of these pulps is useful for measuring the precision of the analytical process of the ALS and Jacobina laboratories, assuring a better degree of accuracy and control on assays. A total of 4,568 pulp samples from drill core and 1,241 channel pulp samples were sent between January 2019 and December 2019.

 

The qualified person responsible for this section of the technical report is of the opinion that there are no drilling, sampling, or recovery factors that could materially affect the accuracy and reliability of the results.

 

11.3                                 SAMPLE SECURITY

 

Samples are handled only by personnel authorized by JMC. Channel samples from the mining operation are delivered directly to the Jacobina laboratory each day upon completion of underground sampling. All drill core from surface and underground drill holes is taken directly to authorized exploration personnel to a drill logging and sampling area within the secured and guarded mine property. The mineralized core intervals are logged and sampled. Core samples from infill drill holes are subsequently delivered to the Jacobina laboratory and core samples

 

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from exploratory drill core samples are loaded onto an outsourced company truck and delivered to ALS laboratory in Vespasiano, Minas Gerais, Brazil.

 

Each sample is assigned a unique sample number that allows it to be traced through the sampling, database, and analytical procedure workflow, and validated against the original sample site. For exploration drill holes, the remaining half of the split core is stored on-site as a control sample, available for review and resampling if required.

 

The photographic record is kept for all drill holes, for later consultation, if necessary.

 

In the opinion of the qualified person responsible for this section of the technical report, the sample preparation, sample security, and analytical procedures at Jacobina are adequate and consistent with industry standards.

 

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12                               DATA VERIFICATION

 

12.1                                 DATABASE VERIFICATION

 

Jacobina staff carried out a data verification program for the assay tables included in the drill hole databases by spot-checking the assay data from a selection of 2019 drill holes that intersected the underground mineralized wireframe domains, thus relevant to the current mineral resource estimate. The validation was done by comparing the selected information entered in the digital database with that of the original laboratory certificates.

 

Additional checks included a comparison of the drill hole collar location data with the digital models of the surface topography and excavation models as well as a visual inspection of the downhole survey information. The validation routines in Leapfrog Geo and Maptek Vulcan software, consisting of checking for overlapping samples and duplicate records, were also carried out.

 

Based on the data review, in the opinion of the qualified person responsible for this section of the technical report, the data entry and verification procedures of drill hole and channel samples data at Jacobina are consistent with industry standards and the data is adequate for the purposes of mineral resource estimation.

 

The QA/QC database prior to 2019 has been validated by independent consultants, most recently by RPA (2019).

 

12.2                                 QUALITY ASSURANCE/QUALITY CONTROL RESULTS

 

The performance of the QA/QC program from January 1 to December 31, 2019 is presented in Table 12-1. Details on the performance of each type of control sample are provided below.

 

Table 12-1: Summary of QA/QC results, January 1 to December 31, 2019

 

Type

 

Standards

 

Blanks

 

 

Failure tolerance = 5% > ± 2SD

 

Failure tolerance = 5% > 5×
Detection Limit

 

 

No of QC 
samples

 


Approved

 


Failures

 


Bias

 

No of QC 
samples

 


Approved

 


Failures

 

Exploration Drilling — ALS

 

536

 

99.63

 

0.37

 

-0.23

 

544

 

99.63

 

0.37

 

Infill Drilling — ALS

 

40

 

100.00

 

0.00

 

0.49

 

43

 

100.00

 

0.00

 

Exploration Drilling — Jacobina lab

 

486

 

96.71

 

3.29

 

-0.95

 

494

 

99.61

 

0.39

 

Infill Drilling — Jacobina lab

 

1,891

 

97.46

 

2.54

 

-0.70

 

1,929

 

99.69

 

0.31

 

Underground Channels — Jacobina lab